Author Topic: "Own" & N/A  (Read 15306 times)

core

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Re: "Own" & N/A
« Reply #15 on: October 28, 2014, 07:03:42 PM »
When do you "own" the house?  At down payment?  At LTV of 49%?

I'm certainly not going to get tangled up in that particular question, but it made me think of something:  People are accustomed to being asked if they "own" or "rent".  They do consider themselves homeowners the day they move in.  Credit card applications frequently ask own/rent with those being the only two choices.  People get used to answering 'own'.  It is very easy to be in a hurry to select OWN without even seeing the other option for MORTGAGE, or having it mentally click.

Jon

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Re: "Own" & N/A
« Reply #16 on: October 28, 2014, 07:42:54 PM »
Two out of the three CRAs show that I have no mortgage on the house.  I contacted the third CRA.  I was told to send a copy of the "Satisfaction" document to them.  I sent a copy of the "Satisfaction" notice I received upon paying off the debt to the third CRA two years ago.

The mortgage is still on my credit report.  It was a 15 year mortgage that I paid off in 13 years.  I expect it will be there 40 years from now.

They also show me as currently employed by a job I left 14 years ago.  I tried to correct that four times; then I gave up.

-Jon

AnilG

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Re: "Own" & N/A
« Reply #17 on: October 31, 2014, 12:34:05 AM »
On PeerCube, I created a custom filter with home ownership parameter as OWN only.

Number of total loans = 28,220
Loss Rate = 3.70%
Actual Yield = 9.64%

Then, I changed the filter to include number of mortgage accounts parameter as 0 to 0

Number of total loans = 16,774
Loss Rate = 4.61%
Actual Yield = 8.60%

Then, I changed the filter to include number of mortgage accounts parameter as 1 to 200

Number of total loans = 11,446
Loss Rate = 2.37%
Actual Yield = 11.47%

It seems borrowers who OWN home and has no mortgage perform worse than borrowers who claim OWN home and has mortgage.


Fred,

You're over analyzing this. I didn't say OWN loans are under performing. All I stated was that I feel there is reason not to believe all OWN loans actually OWN.

Let's say a borrower is 25 and states 'OWN' even though he lives with his parents or rents. His pool of lenders is larger than by saying 'other' or 'rent'. He looks stronger on paper by OWNING and no one can prove he doesn't because there is no FICO notation for OWNING but there is for a mortgage.

It's possible this chap can OWN:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=32359757&previous=browse

It's unlikely IMHO, that these loans OWN:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=31167216&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=32348994&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=33110683&previous=browse

Earliest credit line (recent within last 0-7 yrs) with open and total credit lines (both single digit) just doesn't add up for me and that's all I'm saying.
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Fred93

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Re: "Own" & N/A
« Reply #18 on: October 31, 2014, 12:48:18 AM »
Then, I changed the filter to include number of mortgage accounts parameter as 1 to 200

Artifact in the data.  The # mortgage accounts field is not present in old loans, so by filtering on it, you excluded the recession years.

AnilG

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Re: "Own" & N/A
« Reply #19 on: October 31, 2014, 02:04:59 AM »
You are correct. Just comparing the loans issued in 2012, the earliest year when mortgage accounts were reported along with home ownership, the trend is still the same.

2012 - OWN  and All Mortgage Accounts

Volume = 4,203
Loss Rate = 8.43%
Actual Yield = 6.18%

2012 - OWN and Zero Mortgage Accounts

Volume = 2,903
Loss Rate = 8.79%
Actual Yield = 5.75%

2012 - OWN and One or more Mortgage Accounts

Volume = 1,300
Loss Rate = 7.64%
Actual Yield = 7.16%

Either 30% borrowers are mis-reporting the home ownership status as OWN when they have mortgage or CRA hasn't updated the mortgage account status for borrowers who own home outright or a mix of both.

Artifact in the data.  The # mortgage accounts field is not present in old loans, so by filtering on it, you excluded the recession years.
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Fred

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Re: "Own" & N/A
« Reply #20 on: October 31, 2014, 12:59:09 PM »
Either 30% borrowers are mis-reporting the home ownership status as OWN when they have mortgage or CRA hasn't updated the mortgage account status for borrowers who own home outright or a mix of both.

I was under the impression that HELOC and HELOAN are considered mortgages.

I paid-off my mortgage in 2007 (yes!) but still have a HELOC account.  If I tap into my HELOC, I would be in "OWN with 1 mortgage" category.  No?

AnilG

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Re: "Own" & N/A
« Reply #21 on: October 31, 2014, 10:01:16 PM »
HELOC should be revolving credit line.

http://www.bankrate.com/finance/home-equity/heloc-like-credit-card-account.aspx

Quote
a HELOC is listed as a revolving account and looks like a credit card account on your credit report.

I was under the impression that HELOC and HELOAN are considered mortgages.

I paid-off my mortgage in 2007 (yes!) but still have a HELOC account.  If I tap into my HELOC, I would be in "OWN with 1 mortgage" category.  No?
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Fred

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Re: "Own" & N/A
« Reply #22 on: November 01, 2014, 01:40:17 AM »
HELOC should be revolving credit line.

http://www.bankrate.com/finance/home-equity/heloc-like-credit-card-account.aspx

Quote
a HELOC is listed as a revolving account and looks like a credit card account on your credit report.

I was under the impression that HELOC and HELOAN are considered mortgages.

I paid-off my mortgage in 2007 (yes!) but still have a HELOC account.  If I tap into my HELOC, I would be in "OWN with 1 mortgage" category.  No?
Hah ...

This is from TransUnion: http://www.transunion.com/personal-credit/ask-audrey/home-loan-versus-line-of-credit.page
Quote
Home equity loans and home equity lines of credit, also known as a HELOC, are both sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.

core

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Re: "Own" & N/A
« Reply #23 on: November 01, 2014, 01:56:21 AM »
Quote
Home equity loans and home equity lines of credit, also known as a HELOC, are both sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.

It does not matter what it's secured by (a secured credit card is still revolving), nor does it matter what something is "sometimes referred to".  All that matters is how it is coded.  And that is up to the creditor, but it should be treated as revolving credit.  The FICO formula won't count one against your util% if it's above $30k/$50k depending on the CRA.  If I remember correctly the $30k was for Experian and TU/EQ are both 50k.

Note that it does not matter if this $50k balance is a credit card or HELOC.  Same diff for scoring purposes... neither will count.   At least that's how it worked in the past; I do not know about the '08 model, never had a HELOC myself so I cannot check my own past reports, and I have seen at least one report of a person being dinged on util for a $51k HELOC which contradicts all of the above. 

hoggy1

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Re: "Own" & N/A
« Reply #24 on: November 02, 2014, 09:20:10 AM »
My HELOC is reported (at least by Experian) as revolving credit. Worse than that it shows as a maxed out revolving line (it is on a former home now a rental).
Steve

core

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Re: "Own" & N/A
« Reply #25 on: November 02, 2014, 09:57:48 AM »
My HELOC is reported (at least by Experian) as revolving credit. Worse than that it shows as a maxed out revolving line (it is on a former home now a rental).

In that situation I'd borrow as much I could, wait for it to report the new high balance, then pay back the extra that you borrowed.  Problem solved.

mikedave

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Re: "Own" & N/A
« Reply #26 on: November 02, 2014, 10:32:18 AM »
OWNing your own home could mean that grandpa let you have the old trailer on the back of his property you are currently living in with your girlfreind and seven kids.

Victor

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Re: "Own" & N/A
« Reply #27 on: November 02, 2014, 10:51:11 AM »
OWNing your own home could mean that grandpa let you have the old trailer on the back of his property you are currently living in with your girlfreind and seven kids.

In my neck of the woods, such is almost always the case.

AnilG

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Re: "Own" & N/A
« Reply #28 on: November 06, 2014, 03:04:15 AM »
Depend on how the financial institution codes for credit report, but I consider HELOC and Home Loan as follows.

HELOC (Home Equity Line of Credit) = Revolving Credit
Home Equity Loan = Installment Credit or Mortgage

As both HELOC and Home Loan tend to be large, a quick check of revolving credit balance and installment credit balance in Lending Club loan data gives a clue.

Hah ...

This is from TransUnion: http://www.transunion.com/personal-credit/ask-audrey/home-loan-versus-line-of-credit.page
Quote
Home equity loans and home equity lines of credit, also known as a HELOC, are both sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

hoggy1

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Re: "Own" & N/A
« Reply #29 on: November 06, 2014, 07:16:02 AM »
Depend on how the financial institution codes for credit report, but I consider HELOC and Home Loan as follows.

HELOC (Home Equity Line of Credit) = Revolving Credit
Home Equity Loan = Installment Credit or Mortgage


That is correct: HELOC is not the same as H.E. loan. HELOC is revolving and loan is not.
Steve