<story><title>Mortgage Market Reopens to Risky Borrowers</title><url>https://www.wsj.com/articles/mortgage-market-reopens-to-risky-borrowers-11566379802?mod=rsswn</url></story><parent_chain><item><author>apo</author><text>&amp;gt; Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter.&lt;p&gt;Statements like this are hard to evaluate without knowing the denominator: the total value of new mortgage bonds in each period.&lt;p&gt;All too often, an author who should know better throws the reader a scrap like the following sentence:&lt;p&gt;&amp;gt; The market for unconventional home loans is still tiny compared with the rest of the mortgage market as well as its precrisis past, when unconventional borrowing peaked at more than $1 trillion.&lt;p&gt;But this still doesn&amp;#x27;t convey what percentage of the loans are to sub-690 FICO borrowers.&lt;p&gt;I see this all the time and wonder to what extent it has contributed to mistrust of the traditional media.&lt;p&gt;If we find out that the percentage in 2019 is 1% but in 2007 it was 56%, that casts the entire story in a different light.</text></item></parent_chain><comment><author>rayiner</author><text>The problem is that most journalists are innumerate. As Matt Yglesias notes, &amp;quot;many reporters and editors don&amp;#x27;t really understand what they&amp;#x27;re doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods.&amp;quot; [1] These journalists see the numbers as garnishes on a narrative point. They&amp;#x27;re not trying to put the numbers in some sort of mathematical context to draw sound conclusions. They may not even realize that there is a difference between using numbers for garnish and deriving meaning from numbers.&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.theatlantic.com&amp;#x2F;politics&amp;#x2F;archive&amp;#x2F;2007&amp;#x2F;12&amp;#x2F;innumeracy&amp;#x2F;47581&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.theatlantic.com&amp;#x2F;politics&amp;#x2F;archive&amp;#x2F;2007&amp;#x2F;12&amp;#x2F;innumer...&lt;/a&gt;.</text></comment>
<story><title>Mortgage Market Reopens to Risky Borrowers</title><url>https://www.wsj.com/articles/mortgage-market-reopens-to-risky-borrowers-11566379802?mod=rsswn</url></story><parent_chain><item><author>apo</author><text>&amp;gt; Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter.&lt;p&gt;Statements like this are hard to evaluate without knowing the denominator: the total value of new mortgage bonds in each period.&lt;p&gt;All too often, an author who should know better throws the reader a scrap like the following sentence:&lt;p&gt;&amp;gt; The market for unconventional home loans is still tiny compared with the rest of the mortgage market as well as its precrisis past, when unconventional borrowing peaked at more than $1 trillion.&lt;p&gt;But this still doesn&amp;#x27;t convey what percentage of the loans are to sub-690 FICO borrowers.&lt;p&gt;I see this all the time and wonder to what extent it has contributed to mistrust of the traditional media.&lt;p&gt;If we find out that the percentage in 2019 is 1% but in 2007 it was 56%, that casts the entire story in a different light.</text></item></parent_chain><comment><author>js2</author><text>I don&amp;#x27;t understand this criticism of the article. The point of the article is that lending standards are starting to loosen. The article provided a handful of numbers and one anecdote.&lt;p&gt;The article title and first sentence are: &lt;i&gt;Mortgage Market Reopens to Risky Borrowers. Strict lending requirements that were put in place after financial crisis are starting to erode. The risky mortgage is making a comeback.&lt;/i&gt;&lt;p&gt;Supporting facts are:&lt;p&gt;- &lt;i&gt;&amp;quot;Borrowers took out $45 billion of these unconventional loans in 2018, the most in a decade, and origination is on track to rise again in 2019.&amp;quot;&lt;/i&gt;&lt;p&gt;- &lt;i&gt;&amp;quot;Unconventional loans are largely being extended by nonbank mortgage lenders. But big banks have found another way in ... Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007.&amp;quot;&lt;/i&gt;&lt;p&gt;Then there&amp;#x27;s the single anecdote about a borrower with a sub-690 FICO. Is sub-690 arbitrary? Yes. Is this borrower an example of an egregious loan? No. But is this someone who could not have gotten a loan previously? Yes. It supports the article.&lt;p&gt;The article is fair in its assessment:&lt;p&gt;- &lt;i&gt;&amp;quot;Big banks’ mortgage arms are still avoiding riskier borrowers, leaving them to nonbank lenders. Still, the increase in unconventional loans shows that lenders are looking farther afield for customers.&amp;quot;&lt;/i&gt;&lt;p&gt;Let me put it another way: at what point should the WSJ write an article like this? The 2008 financial crises cratered the economy after previous lending standards became lax. We put regulations in place to prevent that from happening again. Those regulations are starting to be weakened again. I want to know that.</text></comment>