Assess whether dealer overlays introduce prohibited steering (e014dd)

Situation

Examination and Notices work in a manufactured-housing lender with dealer-originated files now turns on dealer overlays introduce prohibited because a branch that stopped taking applications in one ZIP put HMDA LAR validity and quality edits in play. Community-development lender should say what HMDA LAR validity and quality edits proves.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using HMDA LAR validity and quality edits after a branch that stopped taking applications in one ZIP.

Hypotheses to test

• The population in HMDA LAR validity and quality edits is the one a branch that stopped taking applications in one ZIP named, so Remove access or reverse the item follows for this Examination and Notices file.
• The population in HMDA LAR validity and quality edits is adjacent only to a branch that stopped taking applications in one ZIP; Temporary compensating control is the honest Fair Lending call.
• A manufactured-housing lender with dealer-originated files already contained a branch that stopped taking applications in one ZIP before HMDA LAR validity and quality edits arrived; no new Examination and Notices path.
• Provenance on HMDA LAR validity and quality edits after a branch that stopped taking applications in one ZIP is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

Analysis required

• Match the adverse-action language to the facts in HMDA LAR validity and quality edits.
• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after a branch that stopped taking applications in one ZIP.
• For this Fair Lending Examination and Notices file, read HMDA LAR validity and quality edits against a branch that stopped taking applications in one ZIP and write the one fact that would move dealer overlays introduce prohibited for community-development lender.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (HMDA LAR validity and quality edits after a branch that stopped taking applications in one ZIP). The follow-on Examination and Notices action is what community-development lender does next: implement the option, assign an owner, and log the missing fact.