Assess whether dealer overlays introduce prohibited steering (cc9803)

Situation

CRA assessment-area versus lending footprint arrived with an exception rate twice as high for one group after credit controls for HMDA data-quality manager. That is a Fair Lending Examination and Notices decision on dealer overlays introduce prohibited in a small-business desk using a new vendor score.

Decision

HMDA data-quality manager in a small-business desk using a new vendor score must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• HMDA data-quality manager can defend Remove access or reverse the item from CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls in a Fair Lending challenge.
• HMDA data-quality manager cannot defend Remove access or reverse the item from CRA assessment-area versus lending footprint; Temporary compensating control is what the extract actually supports after an exception rate twice as high for one group after credit controls.
• An exception rate twice as high for one group after credit controls never reached the population in CRA assessment-area versus lending footprint — reopen intake, do not close dealer overlays introduce prohibited.
• Two facts in CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls conflict for HMDA data-quality manager; hold this Examination and Notices file.

Analysis required

• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• Flag any disparate-impact table HMDA data-quality manager cannot explain from CRA assessment-area versus lending footprint.
• For this Fair Lending Examination and Notices file, read CRA assessment-area versus lending footprint against an exception rate twice as high for one group after credit controls and write the one fact that would move dealer overlays introduce prohibited for HMDA data-quality manager.

Recommendation