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Even with evidence supporting the validity of nontraditional credit scores, the mortgage industry has a tendency to adapt to change slowly. New revenue sources, however, are greatly needed. The potential revenue in the underserved real-estate market could expedite the widespread adoption of this scoring system. Signs are emerging, as numerous lenders have adapted underwriting guidelines to accommodate nontraditional scores. Several entities in the secondary market also are considering the acceptance of loans written to such guidelines.
The underserved market represents opportunity and future growth for lenders who embrace change. Although they may have to rethink and redefine their policies around acceptable risk measures, new tools can help them make good business decisions and tap into these emerging markets. Lenders who aggressively enter or expand their offerings for traditionally underserved borrowers are already way ahead of the game.
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