Assess whether a model update needs a fair-lending revalidation (836c1b)

Situation

An exception rate twice as high for one group after credit controls put appraisal-gap outcomes in majority-minority tracts in front of adverse-action notice operations lead in a lender expanding into majority-minority census tracts. This Fair Lending / Redlining and HMDA Data close is a model update needs from appraisal-gap outcomes in majority-minority tracts, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Adverse-action notice operations lead in a lender expanding into majority-minority census tracts must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using appraisal-gap outcomes in majority-minority tracts after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• The population in appraisal-gap outcomes in majority-minority tracts is the one an exception rate twice as high for one group after credit controls named, so Remove access or reverse the item follows for this Redlining and HMDA Data file.
• The population in appraisal-gap outcomes in majority-minority tracts is adjacent only to an exception rate twice as high for one group after credit controls; Temporary compensating control is the honest Fair Lending call.
• A lender expanding into majority-minority census tracts already contained an exception rate twice as high for one group after credit controls before appraisal-gap outcomes in majority-minority tracts arrived; no new Redlining and HMDA Data path.
• Provenance on appraisal-gap outcomes in majority-minority tracts after an exception rate twice as high for one group after credit controls is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

Analysis required

• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in appraisal-gap outcomes in majority-minority tracts.
• Check HMDA coding and underwriting policy against a model update needs.
• For this Fair Lending Redlining and HMDA Data file, read appraisal-gap outcomes in majority-minority tracts against an exception rate twice as high for one group after credit controls and write the one fact that would move a model update needs for adverse-action notice operations lead.