Assess whether pricing disparities are justified by legitimate factors

SITUATION An institution preparing for a redlining exam cannot treat a CRA PE that called the assessment area too narrow as incidental context on HMDA LAR validity and quality edits. Fair-lending officer must close pricing disparities are justified from that extract under Fair Lending / Examination and Notices.

DECISION Fair-lending officer in an institution preparing for a redlining exam must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using HMDA LAR validity and quality edits after a CRA PE that called the assessment area too narrow.

HYPOTHESES TO TEST 1. A CRA PE that called the assessment area too narrow is noise around an already-controlled Examination and Notices process in an institution preparing for a redlining exam, given HMDA LAR validity and quality edits. 2. A CRA PE that called the assessment area too narrow is the event in HMDA LAR validity and quality edits that forces Remove access or reverse the item for fair-lending officer under Fair Lending. 3. HMDA LAR validity and quality edits shows a one-file miss after a CRA PE that called the assessment area too narrow, not a Examination and Notices program failure. 4. HMDA LAR validity and quality edits cannot decide pricing disparities are justified yet after a CRA PE that called the assessment area too narrow; hold is the only Fair Lending close an institution preparing for a redlining exam can defend.

ANALYSIS REQUIRED 1. Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after a CRA PE that called the assessment area too narrow. 2. Flag any disparate-impact table fair-lending officer cannot explain from HMDA LAR validity and quality edits. 3. Test a documented exception versus a pattern an institution preparing for a redlining exam must defend. 4. For this Fair Lending Examination and Notices file, read HMDA LAR validity and quality edits against a CRA PE that called the assessment area too narrow and write the one fact that would move pricing disparities are justified for fair-lending officer.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (HMDA LAR validity and quality edits after a CRA PE that called the assessment area too narrow). The follow-on Examination and Notices action is what fair-lending officer does next: implement the option, assign an owner, and log the missing fact.

COMMAND RETURNS - Bottom-line Fair Lending option on pricing disparities are justified, then the evidence in HMDA LAR validity and quality edits, then the action for fair-lending officer - Hypothesis scorecard against HMDA LAR validity and quality edits: supported / rejected / untestable - Named option among Remove access or reverse the item, Temporary compensating control, Approve a documented exception and the fact that kills the others - Owner and next date for fair-lending officer in an institution preparing for a redlining exam