Scoring in the unscored market.

Mortgage BankingVol. 66 Nbr. 1, October 2005

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Summary


COVER REPORT: INDUSTRY TRENDS

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Scoring in the unscored market.

When did paying cash and avoiding credit become a negative in America? The day lenders started using credit scores as shorthand to measure a borrower's creditworthiness. But if you remember how to underwrite a loan the old-fashioned way, you can mine a rich vein of credit-scoreless customers who want to be homeowners despite the fact their paycheck goes in their pants pocket rather than a bank.

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SOMEWHERE OUT THERE IN AMERICA ARE 35 MILLION TO 50 million potential mortgage customers who don't use banks or credit cards. Lacking the one thing you need to get a credit score--an active tradeline aged at least six months--they fly under the radar of many mortgage bankers' marketing efforts.

The fact that they pay cash as they go is about the only thing this group has in common. It includes Hispanic and Eastern European immigrants who distrust the banking system; seniors who long ago paid off their mortgage and now rarely use ...

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