“Now, let me address my second issue, and that is the manual underwriting process itself. While Countrywide’s own internal evidence supports the notion that manual underwriters are approving a good majority of the loan applications that get referred, the fact of the matter remains that a human is involved in this step of the process thereby creating the possibility that a decision is made based upon the level of the borrower’s FICO score.
Thus, the current protocol intentionally creates an environment where borrowers with lower FICO scores are subject to being disproportionately affected by the manual underwriting process. I say we need to amend these systems to do more than just approve the “cream of the crop,” by creating a system that says “no” only to those deemed unwilling to make their mortgage payments.
We must understand that the credit scoring system we have built is still imperfect, and that if we are to have any chance at closing the homeownership gap, we must make a serious investment in improving its capacity and capabilities. We must do this through improved automated underwriting models that take into account more variables, and measure true indicators of risk and willingness to pay. We need an ongoing educational process, not only at the primary market level, but also in the secondary markets and with mortgage insurers to help lead this effort to recalibrate the scoring system. And finally, it must be recognized that borrowers with credit scores below what is currently defined as “creditworthy” levels can still be acceptable credit risks. Thus, the credit score bar dividing creditworthy from high-risk borrowers, must be substantially lowered by the GSEs, the secondary market in general, and with bank regulators. The GSEs have made good progress over the last few years in expanding their credit criteria, but I encourage them to become much more aggressive in this regard.”
Angelo Mozilo, CEO Countrywide and flaming leftwing idiot, February 4, 2003 speech to shareholders.
Good grief! That speech from Mozillo could have come out of the mouth of Eugene Lawson. Or maybe Mark Yonts before he looted his S&L and disappeared.
I’d say Mozilo wasn’t as interested in altruism as he was in turning a profit by tweeking credit scores so that he could sell more and more mortgage securities.
What I like about “Atlas Shrugged” is that not all businessowners are heroes in the story. Some are looters. It does seem the companies who drove us into this “subprime mortgage crisis” fall into the category of looters.
Geez, if ever there were an Orwellian statement.