Viral Nature of Walking Away

[davelj]

[quote=edna_mode]One other dimension to this discussion of “character” with regard to approval of mortgage loans: historically, this was an “dog whistle” word, an excuse on the part of the (usually older white male) bankers to continue the practice of redlining (using geographic maps to determine eligibility for loans that were segregated, usually by race). My understanding is that the Civil Rights Act of 1968 was really the “Fair Housing Act”, and MLK’s economic basis against racism was specifically fighting against institutional economic behaviors such as redlining. In fact, in that sense, credit scores were viewed as an impartial remedy against discriminating against things like race or gender — a metric that was supposed to be an omnibus characteristic that was transparently and equitably applied to all, that would not permit an individual’s discriminatory powers to overrule what a computer put out. And that’s led to some interesting unintended consequences.
[/quote]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.

[desmond]

[quote=sdrealtor]desmond
did you ever make it to Super Rica on Milpas?[/quote]

Last Friday night, had the 16 did not even look to see what is was when I ordered. Fantastic, I am still not sure what it was. What a place, can’t wait to go back. Thanks!

[desmond]

[quote=sdrealtor]desmond
did you ever make it to Super Rica on Milpas?[/quote]

Last Friday night, had the 16 did not even look to see what is was when I ordered. Fantastic, I am still not sure what it was. What a place, can’t wait to go back. Thanks!

[desmond]

[quote=sdrealtor]desmond
did you ever make it to Super Rica on Milpas?[/quote]

Last Friday night, had the 16 did not even look to see what is was when I ordered. Fantastic, I am still not sure what it was. What a place, can’t wait to go back. Thanks!

[desmond]

[quote=sdrealtor]desmond
did you ever make it to Super Rica on Milpas?[/quote]

Last Friday night, had the 16 did not even look to see what is was when I ordered. Fantastic, I am still not sure what it was. What a place, can’t wait to go back. Thanks!

[desmond]

[quote=sdrealtor]desmond
did you ever make it to Super Rica on Milpas?[/quote]

Last Friday night, had the 16 did not even look to see what is was when I ordered. Fantastic, I am still not sure what it was. What a place, can’t wait to go back. Thanks!

[UCGal]

[quote=davelj]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.[/quote]

Dave
As I stated earlier – I don’t see how my character was looked at anywhere in the process of obtaining my mortgage, or refinancing. Both were handled through mortgage brokers. I did not provide personal references, proof I attend church (or not) whether I jaywalk or litter. Character never entered into it. In the refi I never had a face to face interaction with the broker and the underwriter was in another state and I had ZERO contact. They looked at my credit worthiness, capacity (income), my savings, and the LTV. Not my character.

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”?

And I agree with edna_mode on the “character” issue being used, historically, to redline entire neighborhoods that were non-white. My husband owned a home in a redlined neighborhood. They’ve changed how they redline – they ask questions like “what kind of roof does it have”… his neighborhood was mostly flat roofed row houses. His roof happened to not fall in that category and he could hear the surpise when he said he had a shingled/sloped roof. Then they asked about offstreet parking (not a lot in his neighborhood) – he happened to have a garage… again, he could sense the frustration when he said that. This happened with both the mortgage company and the insurance company. Both were looking for trumped up excuses not to do business in his neighborhood. (Frankford neighborhood of Philadelphia for anyone who cares.) Redlining still happens but they have to be sneakier about it. It was easier for the companies when they could just cite “character” if the applicant had dark skin or was in a less preferred area.

I agree with your personal morality that if you commit to a debt, you should honor it. But I don’t think banks ever considered my personal morality with any of the mortgages I’ve had. (I’m on my 4th.)

[UCGal]

[quote=davelj]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.[/quote]

Dave
As I stated earlier – I don’t see how my character was looked at anywhere in the process of obtaining my mortgage, or refinancing. Both were handled through mortgage brokers. I did not provide personal references, proof I attend church (or not) whether I jaywalk or litter. Character never entered into it. In the refi I never had a face to face interaction with the broker and the underwriter was in another state and I had ZERO contact. They looked at my credit worthiness, capacity (income), my savings, and the LTV. Not my character.

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”?

And I agree with edna_mode on the “character” issue being used, historically, to redline entire neighborhoods that were non-white. My husband owned a home in a redlined neighborhood. They’ve changed how they redline – they ask questions like “what kind of roof does it have”… his neighborhood was mostly flat roofed row houses. His roof happened to not fall in that category and he could hear the surpise when he said he had a shingled/sloped roof. Then they asked about offstreet parking (not a lot in his neighborhood) – he happened to have a garage… again, he could sense the frustration when he said that. This happened with both the mortgage company and the insurance company. Both were looking for trumped up excuses not to do business in his neighborhood. (Frankford neighborhood of Philadelphia for anyone who cares.) Redlining still happens but they have to be sneakier about it. It was easier for the companies when they could just cite “character” if the applicant had dark skin or was in a less preferred area.

I agree with your personal morality that if you commit to a debt, you should honor it. But I don’t think banks ever considered my personal morality with any of the mortgages I’ve had. (I’m on my 4th.)

[UCGal]

[quote=davelj]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.[/quote]

Dave
As I stated earlier – I don’t see how my character was looked at anywhere in the process of obtaining my mortgage, or refinancing. Both were handled through mortgage brokers. I did not provide personal references, proof I attend church (or not) whether I jaywalk or litter. Character never entered into it. In the refi I never had a face to face interaction with the broker and the underwriter was in another state and I had ZERO contact. They looked at my credit worthiness, capacity (income), my savings, and the LTV. Not my character.

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”?

And I agree with edna_mode on the “character” issue being used, historically, to redline entire neighborhoods that were non-white. My husband owned a home in a redlined neighborhood. They’ve changed how they redline – they ask questions like “what kind of roof does it have”… his neighborhood was mostly flat roofed row houses. His roof happened to not fall in that category and he could hear the surpise when he said he had a shingled/sloped roof. Then they asked about offstreet parking (not a lot in his neighborhood) – he happened to have a garage… again, he could sense the frustration when he said that. This happened with both the mortgage company and the insurance company. Both were looking for trumped up excuses not to do business in his neighborhood. (Frankford neighborhood of Philadelphia for anyone who cares.) Redlining still happens but they have to be sneakier about it. It was easier for the companies when they could just cite “character” if the applicant had dark skin or was in a less preferred area.

I agree with your personal morality that if you commit to a debt, you should honor it. But I don’t think banks ever considered my personal morality with any of the mortgages I’ve had. (I’m on my 4th.)

[UCGal]

[quote=davelj]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.[/quote]

Dave
As I stated earlier – I don’t see how my character was looked at anywhere in the process of obtaining my mortgage, or refinancing. Both were handled through mortgage brokers. I did not provide personal references, proof I attend church (or not) whether I jaywalk or litter. Character never entered into it. In the refi I never had a face to face interaction with the broker and the underwriter was in another state and I had ZERO contact. They looked at my credit worthiness, capacity (income), my savings, and the LTV. Not my character.

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”?

And I agree with edna_mode on the “character” issue being used, historically, to redline entire neighborhoods that were non-white. My husband owned a home in a redlined neighborhood. They’ve changed how they redline – they ask questions like “what kind of roof does it have”… his neighborhood was mostly flat roofed row houses. His roof happened to not fall in that category and he could hear the surpise when he said he had a shingled/sloped roof. Then they asked about offstreet parking (not a lot in his neighborhood) – he happened to have a garage… again, he could sense the frustration when he said that. This happened with both the mortgage company and the insurance company. Both were looking for trumped up excuses not to do business in his neighborhood. (Frankford neighborhood of Philadelphia for anyone who cares.) Redlining still happens but they have to be sneakier about it. It was easier for the companies when they could just cite “character” if the applicant had dark skin or was in a less preferred area.

I agree with your personal morality that if you commit to a debt, you should honor it. But I don’t think banks ever considered my personal morality with any of the mortgages I’ve had. (I’m on my 4th.)

[UCGal]

[quote=davelj]

Probably true. Although even to this day, every banker is *supposed* to be underwriting to the “Three C’s of Credit”: Character, Capital and Capacity. (So, this idea of “character” in the lending function isn’t something I’m making up – just to be clear – it’s in every lender’s training manual, to be ignored at his or her own peril.)

Unfortunately, during the ’00s, the three C’s morphed into: Collateral Creates Character. That turned out to be incorrect.[/quote]

Dave
As I stated earlier – I don’t see how my character was looked at anywhere in the process of obtaining my mortgage, or refinancing. Both were handled through mortgage brokers. I did not provide personal references, proof I attend church (or not) whether I jaywalk or litter. Character never entered into it. In the refi I never had a face to face interaction with the broker and the underwriter was in another state and I had ZERO contact. They looked at my credit worthiness, capacity (income), my savings, and the LTV. Not my character.

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”?

And I agree with edna_mode on the “character” issue being used, historically, to redline entire neighborhoods that were non-white. My husband owned a home in a redlined neighborhood. They’ve changed how they redline – they ask questions like “what kind of roof does it have”… his neighborhood was mostly flat roofed row houses. His roof happened to not fall in that category and he could hear the surpise when he said he had a shingled/sloped roof. Then they asked about offstreet parking (not a lot in his neighborhood) – he happened to have a garage… again, he could sense the frustration when he said that. This happened with both the mortgage company and the insurance company. Both were looking for trumped up excuses not to do business in his neighborhood. (Frankford neighborhood of Philadelphia for anyone who cares.) Redlining still happens but they have to be sneakier about it. It was easier for the companies when they could just cite “character” if the applicant had dark skin or was in a less preferred area.

I agree with your personal morality that if you commit to a debt, you should honor it. But I don’t think banks ever considered my personal morality with any of the mortgages I’ve had. (I’m on my 4th.)

[davelj]

[quote=UCGal]

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”?
[/quote]

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.

[davelj]

[quote=UCGal]

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”?
[/quote]

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.

[davelj]

[quote=UCGal]

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”?
[/quote]

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.

[davelj]

[quote=UCGal]

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”?
[/quote]

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.

[Author]

Posts