» Ted Koppel Speaks on America's Economic Woes, Spending, Lending, and The "Piggyback" Loan

Ted Koppel Speaks on America's Economic Woes, Spending, Lending, and The "Piggyback" Loan

On my way home this evening, I heard Ted Koppel’s piece on NPR’s ”All Things Considered” entitled “America’s Economic Woes: Loose Spending, Lending”. This link will take you to the podcast. Mr Koppel gave his thoughts about the President’s bailout package. He doesn’t think it’ll work. He wonders, as many people do, where all the money will come from to take care of the lost revenue. According to Mr. Koppel, the President’s plan is like a glorified Ponzi Scheme.

Not to minimize concerns with the bailout plan, what really piqued my interest in the piece, was Mr. Koppel’s reference to a company called Tradelinesolutions. This company promises, for the small fee of $1399.00, to clean up your credit history with a piggyback loan. Here’s how they do it, and I quote directly from the company website:

“SEASONED PRIMARY ACCOUNTS

1. You are matched with an open credit account drawing near its closing. You’re added as a joint account user.

2. The previous account holder is transferred off or to another account.

3. The account stays open with your name still on it.

4. You assume the credit history and own the account and when you pull your credit report this account shows up as your own account.

5. Now you can get a loan!”

So people with bad credit get to “piggyback” on someone else’s good credit to boost credit scores. Unbelievable! When I went to check off a category for this post, I couldn’t find one that really fit. I was thinking maybe I need to have a category labelled unbelievable!

No related posts.

http://www.ethicallending.org Jillayne Schlicke

Hi Debra,

Fitch Ratings, one of the ratings agencies, recently opened up a pool of non-performing mortgage backed securities and re-underwrote the loans. Among other things, they found fraud on many, many levels. Let me see if I can find the report for you…fitchratings.com you have to register to get access but it’s free. The report name is: “The Impact of Poor Underwriting Practices and Fraud in Subprime RMBS Performance.”

RMBS = Residential Mortgage Backed Securities.

One of the things they noticed is when a borrower presented with something like a good credit score, the underwriters tended to overlook other things.

So when a credit score is artificially inflated as you mention, this means the loan is actually MORE risky than it is being presented.

I believe piggybacking is going to go away. I think FICO in the process of changing the way FICO scores are calculated to remove the ability of a borrower to improve their score in this way.
http://www.debrasinick.com Debra Sinick

Thanks, Jillayne, for the information. I will check the link out. I do hope piggybacking will go away. Truly unbelievable!
http://www.debrasinick.com Debra Sinick

I must say they are quick. Not too long after I wrote this article, I received an email message from Tradeline Soutions asking if I needed help with my credit!
bonds7

On January 18th 2008 Bill Ackman wrote a letter to Moody’s and the S&P regarding the monolines. Here is point #8 of Bill Ackman’s Letter to Rating Agencies Regarding Bond Insurers:

I encourage you to ask yourself the following question while looking at your image in the mirror:

Does a company deserve your highest Triple A rating whose stock price has declined 90%, has cut its dividend, is scrambling to raise capital, completed a partial financing at 14% interest (now trading at a 20% yield one week later), has incurred losses massively in excess of its promised zero-loss expectations wiping out more than half of book value, with Berkshire Hathaway as a new competitor, having lost access to its only liquidity facility, and having concealed material information from the marketplace?

Can this possibly make sense?

http://downgradetheinsurers.wordpress.com