The 3-C’s you’ve mentioned are usually referred to as CREDIT, Capacity, and Collateral. The big change in the 00’s was that someone with good credit did not have to prove the Capacity to qualify for an Alt-A.
Are you equating good credit scores with “character”?
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Ummm… the 3 C’s of “credit” do not include “credit.” That would be just a bit redundant. The 3 C’s of credit, as I stated previously, are in fact: Character, Capacity and Collateral. When you find a lenders training manual that includes “credit” as one of the 3 C’s of credit, I’ll be eager to see it.
I think that credit scores are certainly a component of character (that is, they are correlated, albeit far from perfectly). And I think that many lenders (obviously) relied way too heavily on credit scores as a substitute for character. In largely faceless transactions (like mortgage underwriting is today), lenders *should* require large downpayments, high DSC ratios, etc. in order to offset the inability to dig deeper into the borrower’s ability and willingness to pay (there’s rarely a personal relationship as in the case of commercial credits).
I agree with you that a major underwriting flaw was the lack of documentation required to prove Capacity. The ability to package up and sell mortgages to folks who didn’t understand them has not served us well.
