Credit Score

Fitch: Do FICO Scores Matter? 

While rising mortgage defaults are to be expected during a housing market downturn, the sharp rise in U.S. subprime mortgage defaults — combined with a collapse in available subprime credit — is an event that is gaining strong attention from regulators and rating agencies alike. In a new report, Fitch Ratings tackles the collateral attributes that contribute to early default activity in subprime mortgages underlying RMBS issuances. Generally, Fitch noted that there is typically a lag between the slowdown in home price growth and a rise in mortgage defaults. However, the rating agency’s analysis found that the severe response of the 2006 subprime vintage to the cooling housing market is attributable to high borrower leverage, as well as the widespread use of stated income loan programs.