Assess whether comparative files show second-review bias (62416e)

Situation

Examination and Notices work in a manufactured-housing lender with dealer-originated files now turns on comparative files show second-review because an exception rate twice as high for one group after credit controls put geographic application and origination heat map in play. Community-development lender should say what geographic application and origination heat map proves.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using geographic application and origination heat map after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Authorize Remove access or reverse the item now; geographic application and origination heat map already has the discriminator after an exception rate twice as high for one group after credit controls.
• Keep Temporary compensating control in force until geographic application and origination heat map is completed after an exception rate twice as high for one group after credit controls for community-development lender.
• Treat geographic application and origination heat map as Approve a documented exception because both readings appear after an exception rate twice as high for one group after credit controls.
• Refuse a Fair Lending close: community-development lender does not have the page comparative files show second-review turns on in geographic application and origination heat map.

Analysis required

• Match the adverse-action language to the facts in geographic application and origination heat map.
• Check HMDA coding and underwriting policy against comparative files show second-review.
• Compare geographic application and origination heat map to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• For this Fair Lending Examination and Notices file, read geographic application and origination heat map against an exception rate twice as high for one group after credit controls and write the one fact that would move comparative files show second-review for community-development lender.

Recommendation