Imagine that you and your classmates are a research team developing an improved
ID: 2760775 • Letter: I
Question
Imagine that you and your classmates are a research team developing an improved process for evaluating loan applicants for automobile purchases. The goal of the research is to predict which applicants will become delinquent or for
feit their loan. Those who score well on the application will be accepted, and those who score exceptionally well will be considered for lower-rate loans. Prepare a brief report for your instructor addressing these questions:
a. What data do you need for each loan applicant?
b. What data might you need that is not typically requested on a loan application form?
c. Where might you get this data?
Explanation / Answer
For each application or loan, institutions are required to identify the purpose (home purchase, home improvement, or refinancing), lien status, and whether the property relating to the loan or loan application is to be owner-occupied as a principal dwelling. As defined by Regulation C, a home purchase loan is a loan secured by a dwelling and made for the purpose of purchasing that (or another) dwelling.