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Articles by Marc Biron
Mortgage underwriting has a blind spot: The homeowner’s largest risk
Mortgage finance is exceptionally sophisticated at measuring the risk that a homeowner poses to a lender. It measures credit score, debt-to-income ratio, loan-to-value, income stability, reserves and property valuation. Yet there is a striking omission in the architecture of American housing finance: We do very little about the enormous concentration risk that the home itself creates for the homeowner.
Why CUSOs Could Be the Natural Home for the Next Mortgage Innovation
For decades, mortgage innovation has focused primarily on interest rates, underwriting, servicing, and digitization. Far less attention has been paid to one of the most fundamental risks homeowners face: putting a large percentage of their net worth into a single, undiversified asset in a single local housing market. That concentration has consequences not only for consumers, but also for mortgage lenders.
The Case for Reinventing the American Mortgage
Mortgage finance has become highly sophisticated at measuring the risk of the borrower to the lender. Credit scores, debt-to-income ratios, loan-to-value ratios, automated valuation models, mortgage insurance, and capital requirements all attempt to answer the same basic question: What is the probability that this borrower will fail to repay? There is another question that receives far less attention: What risk is the mortgage transaction creating for the homeowner?
Could Credit Unions Build The National Platform For Home Diversification?
Credit unions have long solved scale problems cooperatively. That may make the credit union system particularly well suited to a new mortgage concept built around diversification. Home Diversification is designed to let a homeowner exchange the volatile price performance of one individual property for the much smoother performance of a nationally diversified pool of homes.
The Case For Reinventing The American Mortgage
Mortgage finance has become highly sophisticated at measuring the risk of the borrower to the lender. Credit scores, debt-to-income ratios, loan-to-value ratios, automated valuation models, mortgage insurance and capital requirements all attempt to answer the same basic question: What is the probability that this borrower will fail to repay? There is another question that receives far less attention: What risk is the mortgage transaction creating for the homeowner?
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