Tuesday, October 19, 2004

Mortgage Fraud, My A**

The squaliformes don't like to admit it, let alone talk about it, but they all know their pell-mell rush to adopt automated credit scoring and underwriting tools simply opened them up to being nipped by some fellow opportunists.

The holy grail for mortgage (and auto) squaliformes is instant approval and so-called "risk-based pricing," (read: interest-rate ratcheting) or rejection at the click of a mouse. And to meet that need, Fair Isaac sells their concocted data product.

Instead of knowing who they're lending money to and the other parties in the transaction and developing a relationship designed to last more than thirty minutes, the squaliformes decided to work the volume/greed game rather than follow the quality/responsible lender track. After all, they'll probably never see the victim again.

Now come all the sob stories of how rampant mortgage fraud is and they've got everyone from the IRS and the FBI to local prosecutors dancing to their drumbeat of "we're being scammed!"

Whaaaaaa. Whaaaaaa. Whaaaaaa. Sniffle. Sniffle.

I'm over it, thank you.

Fair Isaac touts the predictability of borrower behavior via the score. But most of the data going into that score has been so contaminated that it's only FICO's ability to distort so-called "studies" and point to the growth and profitability of the market to keep lenders from actually looking under the hood and finding a lawn mower engine they were told was a turbocharged V8.

So more data sources are cropping up with the theoretical prospect of detecting the fraud being perpetrated against the squaliformes.

"LexisNexis RiskWise works by searching multiple databases to verify and validate the authenticity of an applicant's identity and to provide a risk assessment indicator."

And they're trying to hide from the law by calling it a "non-consumer" report product so they don't have to worry about protecting consumer's already miniscule rights under the FCRA:

"The information gained from LexisNexis non-consumer report products is not to be considered a consumer report (as that term is defined in the Fair Credit Reporting Act 15 U.S.C. Section 1681, et seq., "FCRA") and may not be used to determine a consumer's eligibility for credit or insurance for personal, family, or household purposes; employment; a government license, or benefit, or other transaction initiated by a consumer, or for any other purpose permitted by the FCRA."

So if the squaliforme can't use it to determine eligibility for credit, what is it for?

"Well, Your Honor, let's see, since we say we can't use it for what we say we can't use it for then we can't use it and we don't really use it and we don't have to reveal what's in it so...please, Your Honor, don't ask us about it any more."

Complete and utter SS (Squaliformes Scatology). We all know what they're going to use it for and they just don't want to have to live within the law to do it.

The judgment of this court is that the squaliformes need to stop your $%*& whining. And I've got Mr. Colt here so start gettin' the @$%& outta my courtroom NOW.

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: The ringing in your ears means you're still alive. By the way, Doc and the undertaker's bills aren't paid by the Court.)]

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