The credit and lending communities and federal regulators should reassess the entire credit structure and look for ways to increase the availability of credit to qualified borrowers who are good credit risks. The inadvertent response to the "risk layering" inherent in some mortgage products (e.g. no doc, balloon, negative amortization, or "teaser rate" mortgages) has been "safety layering" where so many safeguards are being imposed that there is little risk to making new loans.
Credit Scores and the Impact of Foreclosures and Other Credit Problems
Many REALTORS® have questions about FICO scores and the impact of various adverse credit events on the score. A FICO score is a credit score computed using proprietary formulas of the FICO Corporation (formerly called Fair Isaac), but there is not just one FICO score. Read the FAQs below to learn more.
NAR has also prepared a chart showing the impact of various adverse credit events on the ability of consumers to purchase another home with a FHA, Fannie Mae, or Freddie Mac mortgage.
Tight credit is delaying the recovery of the housing market and the economy as a whole. The importance of reasonable underwriting policies is necessary to increase the availability of credit to qualified borrowers who are good credit risks.
Credit Scoring Resources
Federal Reserve Recorded Webinar: Addressing the Credit Impacts of Foreclosure
Frequently Asked Questions: FICO Score (PDF: 289 KB)