A Shift in the Mortgage Landscape: The 1990s Move to Automated Credit Evaluations

By John W. Straka. 2000

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How the machine ‘thinks’: Understanding opacity in machine learning algorithms (2016, background): “2 and into consequential processes of classiﬁcation that were previously human-determined, such as credit evaluations in an eﬀort to realize cost-savings (as so often fuels shifts toward automation) (Straka, 2000).”
From New Deal Institutions to Capital Markets: Commercial Consumer Risk Scores and the Making of Subprime Mortgage Finance (2009, background): “Industry reports seem to agree that by the mid-1990’s ‘‘mentored AI systems had largely lost out to or begun to progress to statistical mortgage scoring—which brought the key advantage of modeling the actual likelihood of mortgage default” (Straka, 2000, p. 214).”
The Panic of 2007 (2008, background): “See Temkin et al. (2002) and Moody‘s (October 1998). This first crisis did not result in a systemic problem emanating from subprime mortgages, though it was part of the larger Asian and LTCM crises. 14 On automated credit evaluation and other technological change in mortgage underwriting see LaCour-”