Lenders today have had to react to a dynamic economic climate by introducing an element of variety in the types of financial products they offer. For example, recent reports describe the increased marketing of microloans by alternative lenders, who have identified pressing demand for these products from small business owners.
Such variety requires a stable foundation on which to build client portfolios. Sophisticated risk management software with high-level capabilities – such as automated decisioning and the ability to develop custom credit scorecards – can be a vital asset to these lenders. This technology enables banks to pull key metrics from alternative data sources, improve the applicant qualification process and strengthen decision making.
Banks also need to follow best practices in their adherence to lending standards, particularly as economic factors affect consumers' preference for certain financial products. This reality spurred recently guidance from the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
Risk Management & IORR
In September, OCC officials released a statement on the risk management and reporting of investor-owned one- to four-family residential real estate loans (IORR). These products – which are typically paid through rental income earned by the property owner – have grown in popularity as the weakened housing market encourages renting over homebuying, said the OCC.
The guidance said it was important lenders treat IORR lending in much the same way they treat loans for commercial real estate. CRE lending is more similar to IORR lending than it is to traditional owner-occupied residential real estate loans, said the regulator, and therefore banks should apply the same type of credit risk management standards to IORR lending that they currently apply to their CRE portfolio.
[:fr]Lenders today have had to react to a dynamic economic climate by introducing an element of variety in the types of financial products they offer. For example, recent reports describe the increased marketing of microloans by alternative lenders, who have identified pressing demand for these products from small business owners.
Such variety requires a stable foundation on which to build client portfolios. Sophisticated risk management software with high-level capabilities – such as automated decisioning and the ability to develop custom credit scorecards – can be a vital asset to these lenders. This technology enables banks to pull key metrics from alternative data sources, improve the applicant qualification process and strengthen decision making.
Banks also need to follow best practices in their adherence to lending standards, particularly as economic factors affect consumers' preference for certain financial products. This reality spurred recently guidance from the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
In September, OCC officials released a statement on the risk management and reporting of investor-owned one- to four-family residential real estate loans (IORR). These products – which are typically paid through rental income earned by the property owner – have grown in popularity as the weakened housing market encourages renting over homebuying, said the OCC.
The guidance said it was important lenders treat IORR lending in much the same way they treat loans for commercial real estate. CRE lending is more similar to IORR lending than it is to traditional owner-occupied residential real estate loans, said the regulator, and therefore banks should apply the same type of credit risk management standards to IORR lending that they currently apply to their CRE portfolio.
[:es]Lenders today have had to react to a dynamic economic climate by introducing an element of variety in the types of financial products they offer. For example, recent reports describe the increased marketing of microloans by alternative lenders, who have identified pressing demand for these products from small business owners.
Such variety requires a stable foundation on which to build client portfolios. Sophisticated risk management software with high-level capabilities – such as automated decisioning and the ability to develop custom credit scorecards – can be a vital asset to these lenders. This technology enables banks to pull key metrics from alternative data sources, improve the applicant qualification process and strengthen decision making.
Banks also need to follow best practices in their adherence to lending standards, particularly as economic factors affect consumers' preference for certain financial products. This reality spurred recently guidance from the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
In September, OCC officials released a statement on the risk management and reporting of investor-owned one- to four-family residential real estate loans (IORR). These products – which are typically paid through rental income earned by the property owner – have grown in popularity as the weakened housing market encourages renting over homebuying, said the OCC.
The guidance said it was important lenders treat IORR lending in much the same way they treat loans for commercial real estate. CRE lending is more similar to IORR lending than it is to traditional owner-occupied residential real estate loans, said the regulator, and therefore banks should apply the same type of credit risk management standards to IORR lending that they currently apply to their CRE portfolio.
[:it]Lenders today have had to react to a dynamic economic climate by introducing an element of variety in the types of financial products they offer. For example, recent reports describe the increased marketing of microloans by alternative lenders, who have identified pressing demand for these products from small business owners.
Such variety requires a stable foundation on which to build client portfolios. Sophisticated risk management software with high-level capabilities – such as automated decisioning and the ability to develop custom credit scorecards – can be a vital asset to these lenders. This technology enables banks to pull key metrics from alternative data sources, improve the applicant qualification process and strengthen decision making.
Banks also need to follow best practices in their adherence to lending standards, particularly as economic factors affect consumers' preference for certain financial products. This reality spurred recently guidance from the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
In September, OCC officials released a statement on the risk management and reporting of investor-owned one- to four-family residential real estate loans (IORR). These products – which are typically paid through rental income earned by the property owner – have grown in popularity as the weakened housing market encourages renting over homebuying, said the OCC.
The guidance said it was important lenders treat IORR lending in much the same way they treat loans for commercial real estate. CRE lending is more similar to IORR lending than it is to traditional owner-occupied residential real estate loans, said the regulator, and therefore banks should apply the same type of credit risk management standards to IORR lending that they currently apply to their CRE portfolio.
[:tr]Lenders today have had to react to a dynamic economic climate by introducing an element of variety in the types of financial products they offer. For example, recent reports describe the increased marketing of microloans by alternative lenders, who have identified pressing demand for these products from small business owners.
Such variety requires a stable foundation on which to build client portfolios. Sophisticated risk management software with high-level capabilities – such as automated decisioning and the ability to develop custom credit scorecards – can be a vital asset to these lenders. This technology enables banks to pull key metrics from alternative data sources, improve the applicant qualification process and strengthen decision making.
Banks also need to follow best practices in their adherence to lending standards, particularly as economic factors affect consumers' preference for certain financial products. This reality spurred recently guidance from the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
In September, OCC officials released a statement on the risk management and reporting of investor-owned one- to four-family residential real estate loans (IORR). These products – which are typically paid through rental income earned by the property owner – have grown in popularity as the weakened housing market encourages renting over homebuying, said the OCC.
The guidance said it was important lenders treat IORR lending in much the same way they treat loans for commercial real estate. CRE lending is more similar to IORR lending than it is to traditional owner-occupied residential real estate loans, said the regulator, and therefore banks should apply the same type of credit risk management standards to IORR lending that they currently apply to their CRE portfolio.
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