Garbage in, garbage out

The best credit risk analysis system in the world will not help you if your employees just fill in the blanks with random crap. Barry Ritholtz:

3 "handy steps" for getting a questionable loan approved by JPM Chase's automatic system:

1. Lump all of an applicant's compensation as the applicant's base income, rather than breaking out commissions, bonuses and tips.

2. Do not disclose use of gifts for down payments.

3. If all else fails, simply inflate the applicant's income. "Inch it up $500 to see if you can get the findings you want. Do the same for assets.

Thus reads an internal memo from Chase obtained that accidentally found its way into the hands of journalist Jeff Manning of The Oregonian. It was the basis for an article titled, Chase mortgage memo pushes 'Cheats & Tricks'.



This, mind you, from one of the banks who is weathering the subprime crisis rather well. One wonders where they were getting the numbers at the other banks.

No, don't answer that. This is a family blog.