I was just reading that credit card companies may start setting terms based on how their cards are used. For example, someone who regularly charges at a liquor store might get a higher interest rate.

You know that logic is going to trickle into credit ratings eventually, lowering scores for people who may charge porn, cigarettes, or anything else these “gateways to credit” decide is suspicious.

We’re shoveling money into banks and not even asking what they’re going to do with it. So why should an individual have to give a bank his financial life history?

Success in this business is based on relationships and understanding the need of the client. So I don’t think anyone can claim the AUS systems are the answer to underwriting. I have lost business over the years, especially during the boom, because I knew when a deal did not make sense for the borrower and I was not afraid to turn down a loan. I was often told that XYZ company down the street would do the loan – my reply “I have a conscience”.

I could have easily processed many loans through the automated systems and made three times as much money. However, today, my bank account is plentiful and I can sleep at night.

It is time to go back to the basics of personal relationships, educationing mortgage professionals on how to read a loan application, use a calculator, calculate debt to income ratios, and stop relying on computers to tell them what makes sense. Common sense is what we need again! Remember, AUS systems do not take in to account non-credit related expenses of the borrower. Most borrowers have plenty of financial obligations which do not appear on a credit report.

I have no doubt our government and lending institutions will not learn a lesson from the housing demise. Lisa is correct, the decrease in credit scores and increase in foreclosures and short sales will force lenders down the road to create “fancy” new loan programs to suit these borrowers. The cycle when begin again.

I do not however give all the blame to the lenders or wall street. So many investors and homeowners are taking advantage of the current situation. Otherwise creditable borrowers are walking away from properties or negotiating modifications simply because the equity has disappeared and there is no accountability required anymore.

We have become a society of “users”.

It’s time once again for face to face meetings with borrowers (something we have always required) and time for mortgage professionals to actually have training (and brains!).

Thank you for letting me interject!

My husband has been in the mortgage business for over 20 years and currently owns a broker firm with a partner. Even people with fantastic credit, scores, income, LTV etc are subject to crushing conditions, costing everyone time and money.