Assess whether a model update needs a fair-lending revalidation (840b63)

Situation

The desk packet is model-reason-code mapping that does not match notices after a notice that cites 'other' as the principal reason 40% of the time. HMDA data-quality manager in a lender expanding into majority-minority census tracts has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending Pricing and Credit Limits file.

Decision

HMDA data-quality manager 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 model-reason-code mapping that does not match notices after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• A notice that cites 'other' as the principal reason 40% of the time is noise around an already-controlled Pricing and Credit Limits process in a lender expanding into majority-minority census tracts, given model-reason-code mapping that does not match notices.
• A notice that cites 'other' as the principal reason 40% of the time is the event in model-reason-code mapping that does not match notices that forces Remove access or reverse the item for HMDA data-quality manager under Fair Lending.
• Model-reason-code mapping that does not match notices shows a one-file miss after a notice that cites 'other' as the principal reason 40% of the time, not a Pricing and Credit Limits program failure.
• Model-reason-code mapping that does not match notices cannot decide a model update needs yet after a notice that cites 'other' as the principal reason 40% of the time; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

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 model-reason-code mapping that does not match notices.
• Check HMDA coding and underwriting policy against a model update needs.
• For this Fair Lending Pricing and Credit Limits file, read model-reason-code mapping that does not match notices against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move a model update needs for HMDA data-quality manager.

Recommendation