Click Here

REALTORŪ Magazine Online: The real estate professional's business support tool.

OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®

Daily Real Estate News  |  March 23, 2007  |   Are Computers to Blame for Bad Lending?
Automated underwriting software spurred the growth of subprime loans, but don’t blame computers, says Pat McCoy, a law professor at the University of Connecticut, who is an expert on real estate lending.

At fault for the subprime meltdown? Users whose lax controls and willingness to rely on shortcuts led them to approve borrowers that under a less-automated system would never have made the cut, McCoy says.

''Used properly, automated underwriting is a wonderful thing,'' McCoy says. The problem, she says, comes when lenders customize it to approve the wrong borrowers.

Subprime lenders like automated underwriting because it is cheap and fast. A 2001 Fannie Mae survey found that automated underwriting reduced the average cost to lenders of closing a loan by $916. The software aims to quickly weed out the very riskiest of applicants and automatically approve the rest.

Source: The New York Times, Lynnley Browning (03/23/07)

Browse all of today's news
E-mail this page to a friend
Give us feedback

Search news
Launch my search
 
Subscribe to news
Subscribe to News
Daily and weekly real estate news, trends, NAR press releases, convention coverage, plus exclusive features and columns.

RSS Feed
Get the Daily Real Estate News delivered straight to your desktop or news aggregator. (New to RSS? Learn the basics here.)
 
 
SHARE YOUR INSIGHTS
How did you sell it?
Tell us how you overcame hurdles to sell a challenging or very unique listing!