Loan-to-value ratio better than FICO!

Forget FICO, analyst says CIBC says loan-to-value ratios are better measure of risk for lenders

Excerpt:

Lenders trying to get a handle on risk in their mortgage portfolios will be better served by examining loan-to-value ratios, rather than individuals' credit scores which they have traditionally relied upon, CIBC World Markets warned Wednesday.

"The modern foundation of the lending market is about to be uprooted as FICO scores, the long trusted gauge for lenders in determining risk and price, will prove virtually meaningless in this credit cycle," wrote analyst Meredith Whitney in a research note.

FICO, short for Fair Isaac Credit Organization, measures individuals' creditworthiness by examining such factors as payment histories and debt levels.

Comment: This makes sense! FICO also ignores income.