Wall Street isn’t the only financial sport in town that has its fair share of glitches and hiccups. The credit-rating agency Verve has been hammered for years for being too lenient in rating mortgage-backed securities. This year, the agency was forced to issue a klaxon alert to all of its staff, saying that “the quality of available restructuring and capital markets services remain at an all-time low”. It’s given out more than a dozen notices this year alone. The problems have been so widespread that Verve is now issuing durations of up to 90 days, which makes it one of the worst agencies to work for on Wall Street.
The credit-rating agency Verve The Mortgage Market
At the end of last year, Verve, which was established in 1976, had a record number of complaints about a number of banks and credit unions. The main problem was that the agency was too lenient in rating mortgages. As a result, many people got into over-boring and under-rating their mortgage loan, causing them to pay more in interest and fees than they should have. New York City City’s Red Cross had its own problems with over-boring and underrating. So, the agency has long been a target for complaints. Verve is still looking into the massive amount of complaints it has received.
The Credit Suisse Quality and Pricing Team
Last year, the Credit Suisse Quality and Pricing Team (QAT) was charged with determining the best way to manage trust and finances at the firm. The team released a report saying that it was being too hard on clients, and that the firm was being too lenient in increasing balance sheets. This led to calls for increased transparency and oversight at the company, which had the temerity to go all in on hiring a new chief financial officer.
Loan Programs
Last year, the Vantage Scoring system was replaced with a more user-friendly website, which has been under heavy criticism for being long-term-only. What’s more, the Vantage Scoring service itself was highly critical of its own performance. The scorecard contains no facts, is too subjective, and has no standardized method for calculating credit score. The Vantage Score is based on a combination of appraisal, algorithms, and survey data. The VantageScore was designed to be a broad, easy-to-use scorecard that anyone could use to rate their credit from 100 to Am NM. But CEOStephen J. Schwarzman said there was a problem in creating a standard score for all credit scores, including VantageScore scores. VantageScore is not a straight-shot score, but an “overlaid score”, meaning it includes multiple factors that affect each score, such as a person’s income, credit score, debt-to-income, and other factors.
Vantage Scoring and Accessibility
Last year, Vantage Scoring was updated to include access to many online tools and services, including VantageScoreTM and VantageScore Explorer. VantageScore is a service that allows users to create their own VantageScore, which they can then use to rate their credit on a range of lenders. Currently, VantageScore is available for Ak diamonds, American Express, BANK of America, American Express Select, Bank of America, Citi, Fidelity, Global Crossing, Insure.com, and Wells Fargo.
What Now?
Besides its reputation for being a bad agency to work for, Vantage Scoring is also being blamed for the fact that it doesn’t include many important factors that are necessary for a lender to qualify for a high credit score. For example, a lender could have low credit score, but be unable to pay back a high-interest loan, so they qualify for a low VantageScore. But this is not the case with Vantage Scoring, which only shows your score against the default risk of all the lenders you are considering. The Vantage Score is the “overlaid score”, meaning the score is not just a “snapshot” of the actual score, but is also “overlaid” with other factors that affect your score, making it really difficult to define.
Final Words
To make matters worse for Verve, the credit-rating agency itself experienced a number of problems, including a drop in ratings for U.S. and Canadian banks, as well as a decision by the United States Department of Housing and Urban Development to discontinue their fair-risen program. This comes as no surprise to Verve, because the program has been in place since 1999 and Verve has always been a rough service. The problem with Verve is that it is too lenient in raising money for some of its clients, and it also fails to account for the overall state of the economy when determining whether a loan is approved or denied. It’s a tough balance to strike when there are so many factors that go into a mortgage loan’s approval or rejection. And if you are accruing too much debt, you could end up paying interest on it. Verve is one of the worst credit-rating agencies in the world, and it will do everything in its power to prevent you from getting into over-boring and underrating your mortgage loan.
