Monday, September 22, 2008

The Subprime Loan Machine; Automated Underwriting Software Helped Fuel a Mortgage Boom

More on sub-prime loan software, from the March 23, 2008 NY Times:

...Automated underwriting ''replaced the ways we used to extend credit,'' said Prof. Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard....

..Samir Rohatgi, a vice president at MindBox, said that old system of manual underwriting actually encouraged loan officers working on commission to grant bad loans...

The old cliche' garbage in, garbage out applies here.

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