Credit Rating Firms Failed to See Rising Risk in Mortgage Products

The dominant credit rating agencies used risk models that turned out to be inaccurate, derived from faulty data on subprime, interest-only and other high risk mortgages that came to dominate the housing market, according to a Senate subcommittee’s report. Throughout the buildup of the housing bubble, Moody’s and S&P boosted revenues substantially by rating securities backed by residential mortgages.

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Bad Sign for Foreclosures: Credit Cards Taking Priority

A troubling “payment hierarchy” may be here for a while, according to a new study by TransUnion, which reveals that consumers pay their credit cards before their house payment – and more are delinquent on mortgages while current on their cards. That trend is the reverse of traditional payment and delinquency behavior where mortgages take priority. And it is one more ominous sign that the foreclosure crisis may not be close to peaking.

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Tougher FHA Increases Premiums, Credit Standards

In new policies aimed at bolstering its depleted reserves, Federal Housing Administration officials today announced tougher measures for borrowers, including higher mortgage insurance premiums, tighter credit scoring requirements and higher down payments. The FHA also is reducing seller concessions to three percent, from six percent to diminish “incentives to inflate appraised value.” The agency is also implementing a series of “significant measures aimed at increasing lender enforcement.”

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Fed Offers Vital Credit Card Tips for Black Friday Kick-off

The Federal Reserve wants “Black Weekend” shoppers to use their credit cards wisely, so it is placing 45-second ads to drive the message home in movie theaters through Dec. 3. The ads will appear before movie previews at 12 “highly-attended theaters in major metropolitan areas,” the Fed announced.

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