Assess whether comparative files show second-review bias (9b2889)

Situation

In a credit union rolling out a special-purpose credit program, small-business decline comparative file set is the evidence after a HMDA resubmission that still fails quality edits. Second-review underwriter has to pick Remove access or reverse the item or Temporary compensating control for this Fair Lending Examination and Notices close using small-business decline comparative file set.

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 small-business decline comparative file set after a HMDA resubmission that still fails quality edits.

Hypotheses to test

• Small-business decline comparative file set reads as Remove access or reverse the item once a HMDA resubmission that still fails quality edits is lined up to the same Fair Lending population.
• Small-business decline comparative file set is closer to Temporary compensating control after a HMDA resubmission that still fails quality edits; Remove access or reverse the item would over-claim this Examination and Notices extract.
• Approve a documented exception is still live in small-business decline comparative file set for second-review underwriter in a credit union rolling out a special-purpose credit program.
• Small-business decline comparative file set is missing the fact second-review underwriter needs after a HMDA resubmission that still fails quality edits; stop this Fair Lending close.

Analysis required

• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• Match the adverse-action language to the facts in small-business decline comparative file set.
• Check HMDA coding and underwriting policy against comparative files show second-review.
• For this Fair Lending Examination and Notices file, read small-business decline comparative file set against a HMDA resubmission that still fails quality edits and write the one fact that would move comparative files show second-review 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 (small-business decline comparative file set after a HMDA resubmission that still fails quality edits). Lead with the Fair Lending option small-business decline comparative file set can support after a HMDA resubmission that still fails quality edits, then the two facts that force it, then the Monday action for second-review underwriter in a credit union rolling out a special-purpose credit program.