Assess whether comparative files show second-review bias (b12918)

Situation

Model-risk partner for credit scoring owns comparative files show second-review inside a lender expanding into majority-minority census tracts with appraisal-gap outcomes in majority-minority tracts as the only packet. A HMDA resubmission that still fails quality edits is what changed the clock for this Fair Lending Examination and Notices file.

Decision

Model-risk partner for credit scoring 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 appraisal-gap outcomes in majority-minority tracts after a HMDA resubmission that still fails quality edits.

Hypotheses to test

• Model-risk partner for credit scoring can defend Remove access or reverse the item from appraisal-gap outcomes in majority-minority tracts after a HMDA resubmission that still fails quality edits in a Fair Lending challenge.
• Model-risk partner for credit scoring cannot defend Remove access or reverse the item from appraisal-gap outcomes in majority-minority tracts; Temporary compensating control is what the extract actually supports after a HMDA resubmission that still fails quality edits.
• A HMDA resubmission that still fails quality edits never reached the population in appraisal-gap outcomes in majority-minority tracts — reopen intake, do not close comparative files show second-review.
• Two facts in appraisal-gap outcomes in majority-minority tracts after a HMDA resubmission that still fails quality edits conflict for model-risk partner for credit scoring; hold this Examination and Notices file.

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 appraisal-gap outcomes in majority-minority tracts.
• Check HMDA coding and underwriting policy against comparative files show second-review.
• For this Fair Lending Examination and Notices 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 comparative files show second-review for model-risk partner for credit scoring.

Recommendation