You ARE Your FICO Score

You probably saw yesterday’s front page WSJ article, Subprime Debacle Traps Even Very Credit-Worthy.

The real fun was the great set of interactive charts on how your credit profile impacts underwriting and rates at


courtesy of WSJ


How awesome is this New Century Rate Sheet?


courtesy of WSJ


You are your FICO score . . .


Getting to ‘Yes’

Subprime Debacle Traps Even Very Credit-Worthy
As Housing Boomed, Industry Pushed Loans To a Broader Market
December 3, 2007; Page A1

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What's been said:

Discussions found on the web:
  1. 2and20 commented on Dec 4

    would love to see that rate sheet updated to today’s levels…!

  2. Eric Davis commented on Dec 4

    *grumble grumble*

    Why don’t they just get it over with and cut down to 1%… Obviously, according to everyone it’s good for the economy, and there is no downside, except some crap about moral hazard(morality is for democrats).

    Then I can go on trading, without hitting some crazy fed decision land mine.

    Let me just say, we aren’t getting out of this. The fed can pay us to take money, and it still won’t help.

    This is like the most ignorant debate ever.

    I know it’s off topic.

    a lot of this is said tongue n’ cheek.

    I think I’m cranky today…

    Cherio :)

    That actually is some good chart porn…

    What classifies as a NOD? on anything or just mortgages.. I’ve never had one.. is it different than just missing a payment?

  3. Bob A commented on Dec 4

    What that rate sheet doesn’t show like most rate sheets is that the higher the interest rate charged on the loan, the higher the commision earned by the loan officer/broker.
    So if you can get them to go for 7% instead of 6.5% you earn another .5% etc etc.

    People getting ‘no cost’ refi’s routinely had loan fees added to their balances. Any many of the scumbags, especially those selling ‘option arms’ were getting commissions two or three times the industry norm from people too naive to even read the loan documents (a very large percentage of borrowers).


    Great series in Seattle Times Sunday/Monday focusing on Ameriquest, but these practices applied to many subprime lenders.

    Loan the money to 92 year old woman who can’t pay and then just take her house when she doesn’t. It’s America right? What a country…

    Must read.

  4. Kp commented on Dec 4

    Made up score for a transient made up game.

  5. Martin commented on Dec 4

    I have a question about the rate sheet shown the the WSJ article. Does “margin: 5.90” mean that this mortgage would be reset to 590 basispoints over LIBOR, i.e.: over 10% at this moment? If so, let us brace ourselves for a deluge of bad news. By the way, thank you for blogging; I drop by almost every day. Regards, Martin, the Netherlands

  6. Mattrix commented on Dec 4

    This is bringing back weird and haunting memories. I used to work for New Century. I worked in Capital Markets, working with the securitizations.

  7. Michael C. commented on Dec 4

    Interestingly, a couple local papers are reporting that foreclosures are being caused primarily by falling home prices, as opposed to rising or resetting mortgage payments.

    It is a self feeding phenomenon like any other fall in the capital markets. As home prices fall, people are less inclined to pay their bills no matter how financially capable they are to do so. As home prices fall more and more, the incentive to just walk away increases more and more.

  8. Mind commented on Dec 4

    When we paid cash for our house in ’97, friends thought we were foolish and instead should have used a mortgage and invested the money in internet stocks. House has about tripled in value since then, even with recent retrenchment. Good not to have a mortgage. No credit card debt, either.

    We live in parlous times.

  9. michael schumacher commented on Dec 4


    Spare a thought for those affected by the weather in Oregon and Washington…..pretty bad when you have to close the 5 between Seattle and Portland…


  10. Bob A commented on Dec 4

    From a World Savings sales meeting (I was there). Things to tell your option arm buyer:

    “the only way you’re gonna make money on a house is the appreciation” (so who cares if you’re paying interest only, or negative amortizartion). They got a big laugh when they said: “and what payment option is the borrower usually gonna choose???? the LOWEST.. hah hah hah hah hardy har har”

    But now that borrower is paying more in interest than he could rent for, (even if he could afford the payment) and the house is going down in value.

    This is how we got where we are. This is the company Wachovia bought. These are the loans Wamu and Countrywide starting offering when rates quit dropping and all the fixed rate refis were done.

    Corporations that should have known better don’t you think? And it’s not like nobody was warning them. Drunk with profits from the refi boom, they just didn’t wanna hear it.

  11. Jeremiah commented on Dec 4

    Can *anyone* explain with a degree of authority how exactly FICO computes it’s “score”, and why anybody should care what FICO says, anyway?

  12. montaigne commented on Dec 4

    You should care if you want to borrow.

  13. ken h commented on Dec 4

    “You should care if you want to borrow.”

    Well that’s the rub isn’t Monty. Gotta borrow to consume. This whole housing debacle demontrates what BS the the FICO scam is. FICO IMHO is just used to stiff the middle class a few extra points. What ever happened to saving?

    A good example is when I went to purchase a vehicle for the zero down. They tried pulling the FICO BS and “gee, I see here you were late a few payments on this and that.” FU, I’m walking, take your vehicle and well…you know. Funny how fast they decided to make a exception this time? Keep my FICO in the 500s and pay with cash for everything, see how the illegals trying to steal my identity like those apples!

  14. John Christy commented on Dec 4

    I distrust FICO as much as the next guy, but it’s the game that the banks and credit companies play so if you ever want anything to do with them you’d do well to learn about it. It’s fine for somebody to save up for anything they want to buy, but that becomes a problem if they ever want to purchase a home.

  15. wunsacon commented on Dec 4

    Does ANYONE believe high-level execs at most of the defunct lenders didn’t know better and didn’t willfully choose to screw shareholders — at least those not smart enough or “inside enough” to get out — while they collected record bonuses on fees generated by loans that would go bad?

    “Plausible deniability” has to first be “plausible”.

  16. VJ commented on Dec 5


    When we paid cash for our house in ’97, friends thought we were foolish and instead should have used a mortgage and invested the money in internet stocks.

    How the hell do you expect the up ‘n comers on Wall Street to buy their Lamborghinis and date models with a damn anti-American attitude like that ?

  17. ef commented on Dec 5

    From the WSJ article, “In earlier survey by the Mortgage Bankers Association of borrowers who had bought a house within the previous 12 months found that half couldn’t recall the terms of their mortgage, says the association’s Mr. Duncan.”, is an interesting comment.

    I don’t think it is limited to mortgages though. I use to belong to an investment group, and when talking to people giddy about stocks, when asked about their portfolio annualized return, risk, or any measurement, their eyes glazed over. They really didn’t know what they were buying and how it was performing. WS likes those individuals ;-|

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