Why no crackdown? There is no gov't oversight....its common knowledge that the Bush administration is made up of free market advocates and very pro business. Its why this crap started in the first place. And even after the disaster its spawned, still Bush does nothing to stop it. All part of the anti Christ movement in this country.
Reprieve for the 'Piggybackers': Still No Credit-Score Crackdown
By Kenneth R. Harney
Saturday, November 3, 2007; Page F01
"Piggyback" credit-score-inflation schemes for mortgage applicants haven't been reined in, despite industry pledges to do so at the end of the summer. As a result, lenders continue to be misled into treating loan applicants with poor credit as prime-credit candidates, worsening already critical delinquency problems in the mortgage market.
Fair Isaac, developer of the FICO score widely used for home-loan underwriting, confirmed that its "FICO '08" scoring model is not yet available at the three national credit bureaus. The new model, announced with fanfare in June as an antidote to piggybacking, was to have been activated in September at one of the bureaus, Experian.
But Experian says it has no firm time table to make the model available. The two other bureaus, Equifax and TransUnion, are not scheduled to receive the model until next year, according to Craig Watts, a Fair Isaac spokesman.
The piggybacking problem involves Internet-based firms that "rent" high-quality credit account histories to people with bad credit. Web sites claim to be able to raise consumers' scores by 100 to 200 points, or more, in 30 to 90 days. They do this by paying credit card holders with excellent payment histories to open their accounts to authorized users, who are charged, sometimes $1,000 to $2,000, for the privilege.
Once listed as an authorized user -- even with no physical access to the Visa or MasterCard itself -- the positive credit history of the cardholder flows through to the credit files of the piggybacker. Consumers with FICO scores in the mid-500s can add multiple authorized-user accounts to their files, promoters claim, and boost their scores into the mid-700s.
Loan officers processing mortgage applications typically would be none the wiser. They assume the FICO scores they receive are legitimate, and they quote applicants the appropriate interest rate. A FICO of 750, for example, would qualify the applicant for the lowest interest rates from most lenders.
Credit and mortgage experts say piggybacking score inflation is contributing to the unusually high rate of delinquencies and foreclosures now roiling the financial markets.
Lenders have complained to Congress, state banking regulators and the Federal Trade Commission about piggybacking for more than a year, but to date there have been no crackdowns on promoters. Some regulators privately concede that the piggybacking schemes are exploiting a loophole in the federal Equal Credit Opportunity Act.
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