Fair-lending officer must resolve whether a model update needs a fair-lending

Situation

Fair-lending officer in a mortgage company after a pricing-regression spike has one working extract — appraisal-gap outcomes in majority-minority tracts — after a HMDA resubmission that still fails quality edits. If appraisal-gap outcomes in majority-minority tracts cannot support a model update needs, the honest Fair Lending output is hold.

Decision

Fair-lending officer in a mortgage company after a pricing-regression spike 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 a HMDA resubmission that still fails quality edits.

Hypotheses to test

• A HMDA resubmission that still fails quality edits is noise around an already-controlled Pricing and Credit Limits process in a mortgage company after a pricing-regression spike, given appraisal-gap outcomes in majority-minority tracts.
• A HMDA resubmission that still fails quality edits is the event in appraisal-gap outcomes in majority-minority tracts that forces Remove access or reverse the item for fair-lending officer under Fair Lending.
• Appraisal-gap outcomes in majority-minority tracts shows a one-file miss after a HMDA resubmission that still fails quality edits, not a Pricing and Credit Limits program failure.
• Appraisal-gap outcomes in majority-minority tracts cannot decide a model update needs yet after a HMDA resubmission that still fails quality edits; hold is the only Fair Lending close a mortgage company after a pricing-regression spike can defend.

Analysis required

• Check HMDA coding and underwriting policy against a model update needs.
• Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after a HMDA resubmission that still fails quality edits.
• Flag any disparate-impact table fair-lending officer cannot explain from appraisal-gap outcomes in majority-minority tracts.
• For this Fair Lending Pricing and Credit Limits file, read appraisal-gap outcomes in majority-minority tracts against a HMDA resubmission that still fails quality edits and write the one fact that would move a model update needs for fair-lending officer.

Recommendation