Assess whether pricing disparities are justified by legitimate factors

SITUATION Examination and Notices work in a credit union rolling out a special-purpose credit program now turns on pricing disparities are justified because a HMDA resubmission that still fails quality edits put CRA assessment-area versus lending footprint in play. Second-review underwriter should say what CRA assessment-area versus lending footprint proves.

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 HMDA resubmission that still fails quality edits.

HYPOTHESES TO TEST 1. Authorize Remove access or reverse the item now; CRA assessment-area versus lending footprint already has the discriminator after a HMDA resubmission that still fails quality edits. 2. Keep Temporary compensating control in force until CRA assessment-area versus lending footprint is completed after a HMDA resubmission that still fails quality edits for second-review underwriter. 3. Treat CRA assessment-area versus lending footprint as Approve a documented exception because both readings appear after a HMDA resubmission that still fails quality edits. 4. Refuse a Fair Lending close: second-review underwriter does not have the decision pricing disparities are justified turns on in CRA assessment-area versus lending footprint.

ANALYSIS REQUIRED 1. Check HMDA coding and underwriting policy against pricing disparities are justified. 2. Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after a HMDA resubmission that still fails quality edits. 3. Flag any disparate-impact table second-review underwriter cannot explain from CRA assessment-area versus lending footprint. 4. For this Fair Lending Examination and Notices file, read CRA assessment-area versus lending footprint against a HMDA resubmission that still fails quality edits 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 HMDA resubmission that still fails quality edits). If CRA assessment-area versus lending footprint cannot force a Fair Lending label under Examination and Notices, stop. Do not invent missing evidence a credit union rolling out a special-purpose credit program does not have.

COMMAND RETURNS - Bottom-line Fair Lending option on pricing disparities are justified, then the evidence in CRA assessment-area versus lending footprint, then the action for second-review underwriter - Hypothesis scorecard against CRA assessment-area versus lending footprint: supported / rejected / untestable - What changes pricing disparities are justified if a HMDA resubmission that still fails quality edits is later withdrawn - Named option among Remove access or reverse the item, Temporary compensating control, Approve a documented exception and the fact that kills the others