PMC Mortgage Lender's Blog

"U.S. lenders have experienced two distinct phases of consumer credit risk" from 2005 to the present, reports Rachel Bell of FICO's Global Scoring Analytic Products & Services Division.

Early in the sampled period lenders saw a sizeable increase in the number of consumers who scored in the lowest (300-499) and the highest (800-850) segments of the FICO® Score range, and a corresponding drop in the volume of consumers at the middle range of 600-749.

"In our experience," states Bell, "this movement toward the tails of the FICO® Score distribution curve is typical during economic downturns."

The downward shift was a result of highly leveraged consumers experiencing rapid increases in credit problems, including serious delinquencies and bankruptcies, that pushed their risk scores toward the low end of the score range.

At the same time, mainstream consumers protected their finances by paying down revolving debt, postponing new purchases and avoiding purchases that required financing. Such behavior tends to improve consumers' credit risk and pushed their FICO® Scores higher.

The data suggests that real estate professionals who adjust their sales strategies to focus on "mainstream consumers" may be more successful.

Link: FICO Shift 

Funding for the National Flood Insurance Program (NFIP) which is $18 billion in debt, yet supported by a wide range of industry professionals, will expire absent any Congressional action on Sept. 30.

The House passed a bill earlier this year reauthorizing the program for another five years and recently the Senate Banking Committee green lighted its own version of a bill, but extension of the NFIP remains undecided.

"More than 5.6 million American families depend on the NFIP as their only source of protection against the economic devastation of a flood," said Kurt Pfotenhauer, CEO of the American Land Title Association. The trade group is pushing for extension of the NFIP.