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If there was someway to manipulate the way credit is damaged by looking at individuals so that only sub-prime borrowers are punished - that would be a possible
by prat 17y ago
If there was someway to manipulate the way credit is damaged by looking at individuals so that only sub-prime borrowers are punished - that would be a possible solution. Let the responsible buyers walk away without penalty. But I understand that this has a potential for regime change and is far fetched in our situation.
- bd_at_rivenhill 17y agoFrom the perspective of lenders, who are the people that credit scores are supposed to serve, this would be counter productive. Anyone who fails to pay a debt, for whatever reason, should be penalized. For large lenders, the underwriting decision is now almost entirely statistical, which provides them with lots of operational leverage (but is also one of the reasons that the bubble was allowed to inflate in the first place). If you want someone to make an actual underwriting decision, you need to go to a smaller bank or credit union. You will also find that many of these institutions weren't hit as hard because they made better decisions about what loans to make, and they sold off the poor quality loans that the government forced them make to the secondary market to avoid the hit when they went bad.