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. 1.
Feature Story
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HNMA the
secret of getting a mortgage without a social
security number, and FICO.
Is "FAIR
ISSACS" -- REALLY FAIR, OR IS myfico.com just
another money making credit scam out of
Texas?
•••
As the co-author with
attorney, Melvin Belli, of the Financial LegalCorp
secrets found in "BofA, the Tortfeasor", (1993) --
it was very difficult to reach the member belonging
to the
HNMA,
because it required them to read a legal book in
English. So, in todays world of key words I've had
to change my headliners to a catchy phrase like:
"HNMA The
Hispanic National Mortgage
Assn. -- no SS# needed."
•
•
Imagine you're a mortgage lender, and somebody
comes to you with no Social Security number. Would
you hand him a bunch of money to buy a house?
•••
Don't let the name HNMA fool you. Although it calls
itself an "association," HNMA is a privately held,
profit-making enterprise. And though it's focused
primarily on the Latino community, the company's
aim is to provide home loans &emdash; at rates much
closer to prime than sub-prime &emdash; to a range
of immigrants and others historically locked out of
the market.
•••
There's "a huge business opportunity" in lending to
folks who "fall out of the typical box," Simpser
says. What HNMA has done is create "a new box that
fits these borrowers."
•••
HNMA isn't alone in trying to get beyond a standard
credit score to evaluate people's ability to pay
their mortgage on time. According to some
estimates, more than 50 million consumers don't
even have a score because their credit files, as
compiled primarily by three big data-collection
companies, are short on information or altogether
nonexistent.
•••
In such cases, mortgage giant Fannie Mae has issued
guidelines that call for examining how faithfully a
person has paid the rent and the phone bill over
the previous 12 months. And Fair Isaac Corp., whose
credit scores are used by most mortgage lenders,
and other outfits have been experimenting with
alternative ratings derived from a would-be
homeowner's checking and savings accounts, utility
payments and other factors.
•••
A number of community banks, meanwhile, have also
begun to master the nuances of lending to those
without long credit histories. They've learned to
treat non-cash income (such as government meal
vouchers) as a positive and to not necessarily
consider a peripatetic employment pattern as a
negative. They see regular payments sent to family
members in Mexico or Central America as a sign of
financial stability. And they appreciate that it
may take multiple members of a household to meet a
loan obligation.
•••
While using similar criteria, HNMA claims to have
gone even further: The company says it has devised
an unorthodox mortgage underwriting system that's
more comprehensive and culturally sensitive than
anything out there --and, in an important leap, to
have automated the whole shebang. Its goal is to
give financial institutions an efficient way to
turn out a high volume of good, solid loans to
non-traditional borrowers.
•••
Just how effective all this is remains to be seen.
HNMA has been in the market for only about six
months, backing roughly $200 million in mortgages
for 1,650 customers thus far.
•••
But the company is advised by an impressive group,
including former federal Housing and Urban
Development secretaries Henry Cisneros and Jack
Kemp. And it has established joint ventures with
Deutsche Bank and Wells Fargo & Co.
•Part
02 -
/
Those who've
been pushing for a more robust - and responsible --
mix of financial options for people with low and
moderate incomes are intrigued by what's been
rolled out.
•••
How HNMA fares is "enormously dependent on the
quality of their model" and that "has yet to be
proven," says Ellen Seidman, director of the
Financial Services and Education Project at the New
America Foundation (the think tank where I also
work). But Seidman, who was briefed by HNMA
representatives in the last few weeks, believes
"the concept makes a lot of sense."
•••
If nothing else, HNMA's foray into the mortgage
industry is an excellent reminder that the troubles
afflicting the sub-prime sector -- as punctuated by
Irvine-based New Century Financial Corp. teetering
on bankruptcy -- shouldn't become an excuse to
abandon efforts to extend credit to the
underserved. The mess is mainly the result of tens
of thousands of brokers who, in hot pursuit of
their next commission, seduced these people with
perilous, adjustable-rate mortgages whose interest
rates can hit as much as 15%. In some instances,
the payments due on these time bombs can rise
nearly 50% overnight.
•••
Too often, the ARMs being sold were "fundamentally
flawed," says Paul Leonard, director of the
California office of the Center for Responsible
Lending, a research group that figures nearly 20%
of sub-prime mortgages originated in the last two
years will end in foreclosure -- the most dismal
showing ever in the modern home-loan market. "They
were designed to be refinanced when times were good
and foreclosed on when times were bad." On top of
that, Leonard adds, underwriting standards became
so lax, "if you could fog a mirror you could get a
loan."
•••
Not surprisingly, a chorus is now calling for
tighter regulation of all aspects of the sub-prime
business. And surely this makes sense. Some who
received loans over the last few years never should
have qualified. And those who will remain dependent
on this segment of the market deserve mortgages
that aren't going to blow up on them.
•••
But there's another remedy, as well: Find ways to
channel people who aren't serious risks to the
lender &emdash; but whose creditworthiness can't
easily be measured &emdash; into more
conventionally priced mortgages.
•••
"If many of these borrowers had had prime loans"
with more favorable interest rates and lower fees
attached, "there wouldn't be such a problem" today,
says Bob Gnaizda, policy director at the
Greenlining Institute, a Berkeley-based
organization that advocates on behalf of poor and
minority communities. "Nobody should fall through
the prime sieve" into the sub-prime soup if they
don't have to.
•••
This is precisely the philosophy driving HNMA,
which was started in November 2003 by Luis Maizel,
a who has long managed fixed-income investments for
institutional clients and wealthy individuals. The
56-year-old -- who was known by his friends as "The
Calculator" when he was growing up in Mexico City
&emdash; soon brought in Simpser, 32, a
Mexican-born, Stanford-educated entrepreneur. He
oversaw the team that honed the underwriting model
and developed the related technology. That took 2
1/2 years.
•••
Now, HNMA has built relationships with about 25
credit unions, community banks and other lenders
that originate mortgages (typically 7% to 9%) using
its underwriting system.
•••
Even if all goes smoothly -- and there are no
guarantees -- Simpser acknowledges that the company
has a lot to do before it reaches its objective of
acquiring $5 billion worth of mortgages in the next
three to five years. "There's a learning curve," he
says. "We're trying to understand a culture."
•••
But so far, so good. The rate of loan payments
running more than 30 days past due is only about
1%. And best of all, nobody's ARM has been
twisted.
•••
Rick Wartzman is an Irvine senior fellow at the New
America Foundation. He is reachable at
rick.wartzman@latimes.com.
Part
03 / FICO -
"FAIR
ISSACS" HIS HE REALLY FAIR, OR IS myfico just
another money making scam out of
Texas? -- U.S is number
ONE source of Credit infomation fraud, and FICO of
Texas is part of the money making problem, firm
says, the government sezure study group,
NBS100.com
•
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The United States generates
more malicious computer activity than any other
country, and sophisticated hackers worldwide are
banding together in highly efficient crime rings,
according to a new report.
•
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Researchers at Cupertino,
Calif.-based Symantec Corp. also found that fierce
competition in the criminal underworld was driving
down prices for stolen financial information.
•
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Criminals can buy verified
credit card numbers for as little as $1, and they
can buy a complete identity -- a date of birth and
U.S. bank account, credit card and
government-issued identification numbers -- for
$14, according to Symantec's twice-yearly Internet
Security Threat Report, to be released today.
•
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Researchers at the security
software company found that about a third of all
computer attacks worldwide in the second half of
2006 originated from machines in the U.S.
•
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As a breeding ground for
threats such as spam and malicious code, the U.S.
easily surpasses runners-up China, which generates
10% of attacks, and Germany, which generates
7%.
•
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The U.S. also leads in "bot
network activity." Bots are compromised computers
controlled remotely and operating in concert to
pump out spam or perform other nefarious acts.
•
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The legitimate owner of the
computer typically doesn't know the machine has
been taken over. The phenomenon is largely
responsible for the increase in junk e-mail in the
last six months.
•
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Spam made up 59% of all
e-mail traffic Symantec monitored. That's up 5
percentage points from the previous period. Much of
the spam was related to stock picks and other
financial scams.
•
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The U.S. is also home to
more than half of the world's "underground-economy
servers" &emdash; typically corporate computers
that have been commandeered to facilitate
clandestine transactions involving stolen data and
may be compromised for as little as two hours or as
long as two weeks, according to the report.
•
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The study marks the first
time Symantec researchers have studied the national
origins of computer attacks. The report focused on
attacks during the last half of 2006 on more than
120 million computers running Symantec antivirus
software. The company operates more than 2 million
decoy e-mail accounts designed to attract messages
from around the world to identify spam and phishing
activity.
4.
Related Stories
The California
Public Employees' Retirement System, for example,
has steered clear of CDOs in recent years, said
Curtis Ishi, a senior investment officer at the
pension fund.
•••
"We need to understand the management and how they
produce returns," Ishi said. CDOs, he said, require
"quite a bit of analysis."
•••
CDOs - "Collateralized Debt
Obligations", or MORTGAGE POOLS are home mortgages
used as collateral, and in the 80s created a
$600million dollar fiasco, which sent many mortage
heads to prison. "Getting a handle on CDOs is a
complex challenge," reports the LA
Times.
MORE
CDO MORTGAGE POOL STORY.
Collateralized debt obligations
with a home mortgage, or CDOs, have been a hot
product with many big investors for many years:
says Troy Cory-Stubblefield, co-author of "BOA, The
Tortfeasors".
"In fact,
in recent years Hedge Funds Collateralized by China
U.S. Treasury Bonds have been used to help
monitized the mortagage pools, and why not? It's
their money. --SEE
MORE ABOUT The Tortfeassors, AND MELVIN BELLI
STORY.
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responsible for the content of external InterNet
sites
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Articles • Converging
News MARCH 2007 / TeleCom BuyOuts,
Spinoffs
and Asset Seizure Boom
Respectfully
Submitted
Josie
Cory
Publisher/Editor
TVI Magazine
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• TVI
Magazine, tviNews.net, YES90, Your Easy Search,
Associated Press, Reuters, BBC, LA Times, NY Times,
VRA's D-Diaries, Industry Press Releases, They Said
It and SmartSearch were used in compiling and
ascertaining this Yes90 news
report.
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