The chief executive of Fair Isaac (NYSE: FICO) has a bone to pick with Bill Pulte after the Federal Housing Finance Agency director claimed the company unfairly hiked its prices and was operating like a monopoly.
In an interview with CNBC, FICO CEO Will Lansing insisted his company’s credit score pricing is not creating problems for borrowers.
“We have been accused of raising our prices, and it’s true, we have, but they’re still very, very small relative to what we offer,” Lansing said. “We charge $4.95 for a mortgage score out of $6,000 in closing costs. So, it’s not the cost of a FICO score that’s…creating problems for homeownership.”
Lansing also faulted Pulte’s announcement that mortgage lenders will now be able choose to between a traditional FICO score or one from rival VantageScore. Prior to this, only FICO scores were used by mortgage lenders who sold their loans to Fannie Mae and Freddie Mac.
Lansing insisted there were “all kinds of safety and soundness concerns” with Pulte’s action, claiming it “introduces a dangerous precedent that increases adverse selection risk” and “inexplicably favors a less predictive credit score that will undermine the safety and soundness of the enterprises and their counterparties.” He added the company’s newest credit score model, FICO 10T, outperforms VantageScore’s offering.
“We have over 90% market share in all these other markets that have nothing to do with the government,” Lansing said. “And then within the mortgage market, in the non-conforming market where there’s no government mandate, FICO is the clear industry standard.”
Pulte did not directly comment on Lansing’s remarks, but on his X page the FHFA director shared a link to an Investopedia article with the headline “Credit Score Changes Could Help More Renters Get Mortgages.”
Let us not forget how we got into the great recession. The politicians wanted to deregulate everything and corruption soon followed. Selling poor loans with good ones in bundles where they could hide it. Stated income loans without credit checks or employment checks, interest only loans, etc. etc. were all involved. So what if it turns out Vantagescore or FICO games the system and is able to give just about everyone a score that will enable them to get a loan? How many of those new homeowners will still be paying mortgages in 2 years? When all the loan defaults begin, who will benefit?
What do you think will happen to the real estate market?
One group that would benefit from another 2008 meltdown are the ultra rich who would AGAIN buy up huge packages of non performing assets from banks and make more billions just like they did in the last great recession.
The one difference I see this time around is that there have been so many private loans made. With the interest rates held artificially low between 2016-2021 investors had to make a return on their money somehow so why not lend money to real estate buyers that couldn’t go to a traditional lender at an inflated interest rate. The price of real estate kept climbing rapidly because of those artificially low interest rates and it was easy to get loans on equity. Has no one figured out that it contributed to the crazy inflation we’ve had.
Just some thoughts…………
Thank you Linda for remembering 2008 (and the deregulation policies that led up to it).
Since the days of Reagan, DEREGULATION has been the mantra of the GOP. I remember the GOP Congress banging on about how “regulations, I say, I say, them dern tootin’ regulations is stifling business, and Amurica is being strangled by ’em”.
As regulations fell one by one (or were loosened up or not enforced), the risky business practices kept increasing. Bush 2.0 made sure to tell any regulators “to stand down” and “just let business do what it does best” (like shake down Americans at full tilt??).
The Big Short (the Book) really revealed the details that I was feeling thru these decades and seeing in real estate. In the 3 years before 2008, Brokers were telling their agents to “paint a Rosy picture” for buyers, even as the cracks began to show in 2006 and on thru to the crash in 2008. The Brokers knew what was happening and chose to hide it from buyers. Classes were held to encourage agents (and lenders) to tell buyers that “ain’t nothin’ to worry about…you can always refinance in a few years if anything bad happens with the economy”.
I was the only person in those classes and meetings to object by pointing out that YOU CAN’T refinance if your equity has evaporated with falling home prices and, perhaps, you’ve lost your job too. I got glares from the Brokers.
After 2008, I remember a meeting that 4 major banks whose crisply suited leaders were blaming Realtors for the home prices falling because it was the listing agents who were hiding good offers from the banks. What a load of crap! I stood up and told them that, I, like many other Realtors, were being blocked by banks who refused to accept perfectly good offers, and month after month, the home prices kept falling as offers were delayed or ignored.
I had a gut feeling that the banks were somehow making money on delaying approval of short sales, and I found out later that banks often own the companies that process foreclosures and other aspects of short sales, so the longer they could delay a final sale, they could collect fees and still walk away with funds from a guaranteed loan.
In my neighborhood, a home worth at least $725,000 was listed by the bank’s own listing agent, but offers were ignored for months. In the end, “an investment group” purchased it for $525,000 and flipped it a few months later for $750,000. Banks often have insiders who compose those investor groups.
I witnessed sellers who had 2/3rds equity in their homes who needed a loan modification be promised (in writing) that they had been granted that modification, and payments were made on time, but, nonetheless, the bank foreclosed anyway. It was rare to get a loan modification if you had excellent equity and much easier if you had little or no equity. I saw great people slip into disbelief and depression, some had failed marriages over the crisis.
Wall Street, the Big Financial Players, Lenders, and the Real Estate Industry had pushed deregulation to the point of criminal actions taking place, yet I recall only 2 people going to jail. The punishment for a near global depression was a FULL Bail out of the corrupt and criminals in the Financial Sectors who had purposely engineered this shake down of the American home owner, stealing equity and lives, rather than allowing reasonable loan modifications thru the recession to allow home prices to rise again (which they did) and to save homeowners their hard earned investment.
Instead, the Big Financial Players were bailed out under the Bush/Cheney TARP bill, which was paid for by taxpayers (most of whom did own stock in those companies).
Wall Street is always spouting off about hating “communism” and bragging that Capitalism is the “responsible” economic system because those who earn money should keep it, and IF they make a mistake or a downturn happens, well, the also must suffer the down turns. BUT THEY NEVER DO! These Financial Money Barons are always the first to have their hand out for taxpayer BAIL OUTS.
Big Ag does the same thing, with massive tax credits and safety nets, and subsidies that offer price supports and protections if the market goes down. What other businesses enjoy that luxury? Big Oil, Big Mining, Big Timber all DO, but NOT small and middle sized businesses.
The Uber Rich NEED Recessions and Depressions to suck up cheap buys to flip when the market goes back up again. These UBER rich get Billions in tax credits and tax write-offs that the average person is NOT privy to. The rich borrow on the value of their stocks and can write off the interest costs, while claiming they only earn a modest “visible salary”, but the hidden salary is in those stock backed loans. Pump and Dump schemes continue to occur to allow stock valuations to go up, and this is one reason why.
Unbridled Capitalism is NOT helping the world. It’s killing it.
An example that you can breath in is the Norfolk Southern train derailed in East Palestine a few years ago. Rather than safely cleaning up the toxic liquids, the company decided that it was cheaper to burn (explode) the liquids, which sent black toxic plumes over a wide area, which impacted people, the air, waters, soil, domestic species and wild species. The company made a decision that any fines or settlement was a drop in their toxic bucket of profits. The payouts were in the tens of thousands of dollars to the nearest victims, which in no way covers the damages nor the health impacts.
This is the necrotizing disease that American has nurtured over and over again, from slavery to genocides of Native Americans, to genocides of wild species, to polluting the lands, waters, and air, and in harming the biosphere into multiple layers of damage.
These corporations are so mentally ill, so psychopathic, that they are complaining that “clean air” policies made the air “too clean” and they are now claiming that higher air pollution reflects sunlight, thus giving a cooling offset to climate warming fossil fuel gases.
So, these companies have been promoting RE-Polluting the air around the world, RATHER than pushing a faster conversion to clean renewables!!!
What a load of SHITE (my Scottish rage is rising).
Communism in the twisted forms it took under several nations, also lead to massive harms against humans and the environment, leading to starvation of tens of millions in the 1950’s and 1960’s, along with excessive pollution and loss of vast swaths of wetlands.
No system is perfect, but we need to look to systems that VALUE this planet and ALL its species, NOT just humans, because the systems being used now do not value humans either. It’s exploitation open season all the time.
It’s kind of weird to see so many in the power circles cleave into warring factions.
The FICO wars are just one of many. Such distractions seem an hourly event.
I wonder how much of this is just diversion away from Epstein??
Or just diversion away from Trump’s failed policies and unkept promises?
Trump’s policies seem to be just a more obvious display of GOP efforts in decades past to enrich the already very, very, very rich, but also enriching the Trump Clan into Billionaire status (remember when Trump was near to bankruptcy after his many lost court cases? NO more!
Trump does this self-dealing in open fashion, which, one can admit, is almost refreshing compared to the usual quiet corruption of many in politics.
I remember well when Dick Cheney was selected to pick the company to provide the major services in the Iraq War, and he picked himself (his company, Halliburton) in a NO bid contract deal (meaning NO other bid submissions were allowed). I’m sure he was well compensated for that in some fashion.
Bush 2.0 and Cheney sent huge planes stuffed with Billions of dollars to Iraq and more Billions to Pakistan for the Afghanistan war, and most of those Billions “went missing?”.
I’m sure that much of that money floated back to the Bush/Cheney camp in some form or another.
So, Trump is not the first nor the last engaging in corruption, but he may be the biggest to date. No other Presidential family has socked away so much loot thru so many avenues of corruption (his bribe machines abound).
But the sad reality is that, once again, these taxpaid extortions to the super rich are saddling the average taxpayer with decades long massive national debt, wars lost that the U.S. never should have supported at the start, while critical support for those in need gets cut again, one of thousands of prior cuts, but the Trump cuts may also threaten Medicare with triggered mandatory cuts due to the huge Medicaid cuts.
Trump and the GOP MAGA Congress were clever to make many of those major cuts “take effect” only after the next midterm election. Ah Haa!
In other words, Trump knows that he can gas-light his followers, yet again, and still gain their MAGA votes in the upcoming midterms, and then screw them over again, as he always has done. But he has called his MAGA supporters dumb and stupid many times, and they laugh and accept that as a compliment, as if it comes from a disfunctional and abusive father whose attention they seek, no matter the cost to themselves or to their families or to their nation. It’s actually very sad.
The Endless promises of Trump never materialize (except the attacks on pigmented humans and trans kids wanting to play sports, and policies that give sweeping rights to the extreme right wing evangelicals, yes, those promises he keeps, and that seems to satisfy his MAGA supporters).
Trump promised peace between Israel and Palestine immediately upon his taking the Presidential reins (or “reigns” as Trump would interpret it).
He bloviated promises that his policies would cause consumer prices to FALL within a few days (or hours) of him taking the Oath of Office (an Oath that he is violating daily).
He promised an END to the Ukraine/Russian War within “Two Weeks”, and those “Two Weeks” keep being re-promised, over and over and over, and his 2 week rhetoric is a staple now with most of his promises, including his ridiculous roller coaster Tariff Ride.
His strutting and chest butting to Canada is so laughable.
Trump bellowed that the Trade Deal with Canada (and Mexico) was “the worst trade deal in history, allowing those nations to exploit the U.S.”.
YET, it was TRUMP (himself) who made those Trade Deals during his first presidency. What a buffoon!
But he is counting on his supporters to forget the past and what he did.
Even if he gets his 35% ego tax against Canada, that will only apply to certain products because Trump’s prior trade deal with Canada applies to about 85% of Canadian exports to the U.S. So, even if the 35% is locked in on the remaining trade items, I don’t think Canada will be shaking in their Sorel snow boots. Though they may be shaking from laughter at this childish egomaniac.
I actually understand why MAGA has rage at the financial suffering that the U.S. has now due to the GOP efforts to outsource jobs across the globe. It was Nixon who went to China (those evil communists we were taught to hate) and opened up trade.
The Heritage Foundation wrote those global trade proposals, and Reagan loved it, and Bush 1.0 worked tirelessly to open free trade, including with all nations in North and South America. NAFTA was the result, pushed thru by majority GOP votes, Democrats voting (overall) NO on NAFTA. Clinton (originally against NAFTA) foolishly signed it, and Clinton has been blamed ever since when the NAFTA nirvana did NOT materialize for the U.S. The GOP remains hushed on their nascent and on-going roll in those global trade deals that pushed Americans by the millions out of jobs.
I get why MAGA is furious about that. The problem is that they are backing the same horse, despite Trump’s promises to the contrary. He did NOT create ANY new manufacturing in his first term, and it won’t happen this time either as AI and robots move to front and center, pushing more out of work, this time White Collar workers.
Will the future revolts emerge from out of work white collar workers?