In an effort to keep a closer eye on loan discrimination and unacceptable levels of risk, the Consumer Finance Protection Bureau (CFPB) recently announced that it plans to expand the amount of information it collects about mortgages.
According to an article in the Cleveland Plain Dealer, the CFPB will seek out information about borrowers' ages and credit scores, as well as identifiers for loans and lenders. In addition, the agency will seek out data about a borrower's debt-to-income ration and reasons why they may have been denied loans. It will pursue information about loan-to-value rations, origination charges and interest rates and whether loans are meeting the CFPB Qualified Mortgage criteria for "borrower-friendly" loans.
"These efforts are about better information, better collection and better access to mortgage loan date," CFPB Director Richard Cordray told the news source.
Part of the goal, as reported by the news source, is to simplify the reporting process so banks have an easier time with it. There are even potential plans to use standard forms that banks already use when preparing their loans.
As this blog has written previously, stricter lending standards are shown to improve mortgage performance. And since mortgage applications for larger homes are on the rise, it is important for there to be increased scrutiny of the loans being issued.
The CFPB isn't the only institution that should put more focus on credit risk management. Lenders of all stripes, from traditional banks to alternative lenders, require information about the ability of potential customers to repay their debts.