Assess whether a redlining pattern exists after controls (2bc002)

Situation

After a vendor score change with no disparate-impact test, mortgage pricing residual by prohibited-basis group is what second-review underwriter can touch in a lender expanding into majority-minority census tracts. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this CRA and Special-Purpose Programs file.

Decision

Second-review underwriter 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 mortgage pricing residual by prohibited-basis group after a vendor score change with no disparate-impact test.

Hypotheses to test

• A vendor score change with no disparate-impact test is noise around an already-controlled CRA and Special-Purpose Programs process in a lender expanding into majority-minority census tracts, given mortgage pricing residual by prohibited-basis group.
• A vendor score change with no disparate-impact test is the event in mortgage pricing residual by prohibited-basis group that forces Remove access or reverse the item for second-review underwriter under Fair Lending.
• Mortgage pricing residual by prohibited-basis group shows a one-file miss after a vendor score change with no disparate-impact test, not a CRA and Special-Purpose Programs program failure.
• Mortgage pricing residual by prohibited-basis group cannot decide a redlining pattern exists yet after a vendor score change with no disparate-impact test; 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 mortgage pricing residual by prohibited-basis group.
• Check HMDA coding and underwriting policy against a redlining pattern exists.
• For this Fair Lending CRA and Special-Purpose Programs file, read mortgage pricing residual by prohibited-basis group against a vendor score change with no disparate-impact test and write the one fact that would move a redlining pattern exists for second-review underwriter.

Recommendation