Credit Risk Assessment is a book for the masses! For the banking executive the book is an enhanced risk assessment tool for mitigating risk in the mortgage origination business. However, for the layperson this book is a great source for learning about and understanding the intricacies of mortgage lending. In simple terms, the authors have explained why the mortgage industry was susceptible to the lastest economic disaster and how lending/risk models can be improved for matching borrows with appropriate loan products.
After reading this book it was apparent to me that banks were originating mortgages like a driver navigating a car on the open road at night with headlights. Headlights provide the illusion of safety because they bring the lines marking the middle and the edge of the road into view. But, there are many unforeseen risks.
I would rather make the same journey at daytime when I have a clear view of the road and the surrounding landscape. Credit Risk Assessment has drawn the sun above the horizon! It has cast a light on the shotrcomings of the risk models that have been in use for years -risks that you cannot see at night beyond the reach of headlights. As a trained economist, I could not agree with the authors any more about including “non-traditional” economic data. CCAF is a risk model that will capature the true characteristics of the borrower, unlike today’s antiquated models. BRAVO!
More information at Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and Investors
