What Are The Odds Of Defaulting?

Greg · #1 (**permalink**) 12-30-2005, 12:07 PM

This is something I learned in CE. Yes I took my 6 hours today.

Below 600 - 8 to 1
620-659 = 26 to 1
660-679 = 38 to 1
680-699 = 55 to 1
700-719 = 123 to 1
720-759 = 323 to 1
760-799 = 597 to 1
800+ = 1292 to 1

Erik · #2 (**permalink**) 12-30-2005, 02:29 PM

Interesting stats. That's actually much higher odds than I would have expected.

Secret! · #3 (**permalink**) 12-31-2005, 10:01 AM

Very interesting stats Greg, seen them before (those are at least 7 years old by the way). More importantly than DEFAULT (means borrower stopped paying), is the odd of LOSS after REO. THAT number - which has the biggest impact on originators - is what makes lending programs disappear, like the soon to go bye-bye STATED and NINA products at lower scores and higher LTV's

Greg · #4 (**permalink**) 01-03-2006, 09:12 AM

These are actually FHA figures. I did not realize that until now.

Secret! · #5 (**permalink**) 01-09-2006, 10:03 AM

Sorta makes you wonder why would anybody do deals below 600, huh?

Greg · #6 (**permalink**) 01-09-2006, 04:05 PM

Yeah I know what you mean!

FHA takes some risky stuff for sure but does not penalize for a lower score.

So the old theory bad credit folks come up with about "We are charged higher rates and have problems because of that" is bogus in a sense.