Assess whether pricing disparities are justified by legitimate factors

SITUATION Second-review underwriter in a credit union rolling out a special-purpose credit program has one working extract — CRA assessment-area versus lending footprint — after a community complaint about appraisal gaps. If CRA assessment-area versus lending footprint cannot support pricing disparities are justified, the only defensible Fair Lending output is hold.

DECISION Second-review underwriter in a credit union rolling out a special-purpose credit program must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using CRA assessment-area versus lending footprint after a community complaint about appraisal gaps.

HYPOTHESES TO TEST 1. A community complaint about appraisal gaps is noise around an already-controlled Examination and Notices process in a credit union rolling out a special-purpose credit program, given CRA assessment-area versus lending footprint. 2. A community complaint about appraisal gaps is the event in CRA assessment-area versus lending footprint that forces Remove access or reverse the item for second-review underwriter under Fair Lending. 3. CRA assessment-area versus lending footprint shows a one-file miss after a community complaint about appraisal gaps, not a Examination and Notices program failure. 4. CRA assessment-area versus lending footprint cannot decide pricing disparities are justified yet after a community complaint about appraisal gaps; hold is the only Fair Lending close a credit union rolling out a special-purpose credit program can defend.

ANALYSIS REQUIRED 1. Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after a community complaint about appraisal gaps. 2. Flag any disparate-impact table second-review underwriter cannot explain from CRA assessment-area versus lending footprint. 3. Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend. 4. For this Fair Lending Examination and Notices file, read CRA assessment-area versus lending footprint against a community complaint about appraisal gaps and write the one fact that would move pricing disparities are justified for second-review underwriter.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (CRA assessment-area versus lending footprint after a community complaint about appraisal gaps). The follow-on Examination and Notices action is what second-review underwriter does next: implement the option, assign an owner, and log the missing fact.