Question

From The 5 C's of credit, identify the ways in which the recent US mortgage lending practices failed to follow the discipline of 5 C's of credit.

Answer 1

The five elements that frame a credit analysis facilitate the investor understand of the owner and, therefore, the business and confirm trustiness

these five elements are- Character, Capacity (Cash flow), Condition, Capital, Collateral

Mortgage underwriting in the United States is the method a lender uses to see if the risk of providing a mortgage loan to a particular borrower under specific parameters is acceptable. in the U.S. Most of the risks and terms that underwriters contemplate representing the 3 C's of underwriting: credit, capacity, and collateral.

It is usually accepted that credit standards in U.S. mortgage disposition were relaxed within the early 2000s. Rising rates of delinquency and foreclosures delivered a sharp shock to a variety of U.S. money establishments. on the far side that time of the agreement

The credit score is AN indicator of however well a receiver manages debt. Victimization a mathematical model; the credit report additionally contains the borrower's past derogatory credit. This includes collections, charge-offs, repossession, foreclosures, bankruptcies, liens, and judgments. Typically, if any of those things square measure gifts within the report, it will increase the loan's danger. For many severe blemishes like foreclosures and bankruptcies, an investor could need up to 2 to seven years from the date of satisfaction indicated by the report before approving a loan. Moreover, the investor could need the receiver to reinstate the credit by getting a precise quantity of recent credit to reconstruct their credit. It's also the investor's right to want that every one collections, charge offs, liens, and judgments be paid before closing the loan.