
False Assumption 2: Existing Systems for Risk Management, such as FICO Scores and Rating Agencies, Are Adequate.To a large extent, the current housing market downturn is the consequence of exceptionally lax lending standards that amidst ample liquidity resulted in the creation of a housing bubble. The bubble burst once the unsustainable and artificially-inflated prices eroded affordability and the economic slowdown caused many borrowers with weak credit quality to default on their mortgage.






