Comments on: Risk Based Pricing How Mortgage Rates are Determined. Credit Scores and History http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/ Radical Transparency for The Real Estate and Mortgage Industrys Thu, 20 Nov 2008 22:40:22 +0000 http://wordpress.org/?v=2.6.1 By: AustinSurferDude http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4057 AustinSurferDude Sun, 31 Aug 2008 12:57:27 +0000 http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4057 I agree with one of the previous comments on educating the public. We need much greater transparency in the mortgage and consumer credit rating markets. Without such, we will continue to see huge agency costs that tend to penalize the less educated consumers which is highly correlated with the lower income borrowers, who, arguably, do not need these additional agency costs or penalties. I think a higher degree of transparency would definitely have helped in the recent credit crisis, however I would also argue consumers will buy whatever products are presented with little regard to longer term consequences (such as the case with the terrible ARM products put out there)...as 80% of consumers cannot rationalize well time value of money or future costs at the point of consideration and decision. <br><br>If Congress didn't suck so badly, they could impose better transparency guidelines (note that I'm not saying regulate, but rather ensure transparency, as I believe the market should self-regulate and allow broad risk profiles for investors). I would argue the majority of consumers cannot clearly articulate between interest rate and effective APR that is shown on every mortgage product. I agree with one of the previous comments on educating the public. We need much greater transparency in the mortgage and consumer credit rating markets. Without such, we will continue to see huge agency costs that tend to penalize the less educated consumers which is highly correlated with the lower income borrowers, who, arguably, do not need these additional agency costs or penalties. I think a higher degree of transparency would definitely have helped in the recent credit crisis, however I would also argue consumers will buy whatever products are presented with little regard to longer term consequences (such as the case with the terrible ARM products put out there)…as 80% of consumers cannot rationalize well time value of money or future costs at the point of consideration and decision.

If Congress didn't suck so badly, they could impose better transparency guidelines (note that I'm not saying regulate, but rather ensure transparency, as I believe the market should self-regulate and allow broad risk profiles for investors). I would argue the majority of consumers cannot clearly articulate between interest rate and effective APR that is shown on every mortgage product.

]]> By: Rob Hahn http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4056 Rob Hahn Tue, 29 Jul 2008 22:04:41 +0000 http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4056 Jeff...<br><br>This should be perma-pinned somewhere on your site and various other sites.<br><br>In fact, this should be required reading for all graduating high school students.<br><br>I truly believe that if you took this whole series and turned it into an easy-to-read, easy-to-understand set of videos or books, it would be a valuable public service.<br><br>-rsh Jeff…

This should be perma-pinned somewhere on your site and various other sites.

In fact, this should be required reading for all graduating high school students.

I truly believe that if you took this whole series and turned it into an easy-to-read, easy-to-understand set of videos or books, it would be a valuable public service.

-rsh

]]> By: California Mortgage Home Loan http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4055 California Mortgage Home Loan Tue, 15 Jul 2008 18:51:25 +0000 http://thexbroker.com/2008/07/10/risk-based-pricing-how-mortgage-rates-are-determined-credit-scores-and-history/#comment-4055 While RBP seems complicated, it's the best thing that could have come out of the current mortgage crisis. While RBP seems complicated, it's the best thing that could have come out of the current mortgage crisis.

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