Assess whether dealer overlays introduce prohibited steering (6f8ba9)

Situation

The desk packet is HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls. Second-review underwriter in a lender expanding into majority-minority census tracts has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending 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 HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Authorize Remove access or reverse the item now; HMDA LAR validity and quality edits already has the discriminator after an exception rate twice as high for one group after credit controls.
• Keep Temporary compensating control in force until HMDA LAR validity and quality edits is completed after an exception rate twice as high for one group after credit controls for second-review underwriter.
• Treat HMDA LAR validity and quality edits as Approve a documented exception because both readings appear after an exception rate twice as high for one group after credit controls.
• Refuse a Fair Lending close: second-review underwriter does not have the page dealer overlays introduce prohibited turns on in HMDA LAR validity and quality edits.

Analysis required

• Flag any disparate-impact table second-review underwriter cannot explain from HMDA LAR validity and quality edits.
• 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 HMDA LAR validity and quality edits.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against an exception rate twice as high for one group after credit controls and write the one fact that would move dealer overlays introduce prohibited for second-review underwriter.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / CRA and Special-Purpose Programs packet (HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls). If HMDA LAR validity and quality edits cannot force a Fair Lending label under CRA and Special-Purpose Programs, stop. If HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending CRA and Special-Purpose Programs close, second-review underwriter must do not infer a control or scheme beyond the transaction and entitlement evidence.