Assess whether dealer overlays introduce prohibited steering (f76295)

Situation

A bank with thin HMDA LAR quality cannot treat a CRA PE that called the assessment area too narrow as color commentary on HMDA LAR validity and quality edits. CRA strategist must close dealer overlays introduce prohibited from that extract under Fair Lending / Examination and Notices.

Decision

CRA strategist in a bank with thin HMDA LAR quality 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 CRA PE that called the assessment area too narrow.

Hypotheses to test

• HMDA LAR validity and quality edits reads as Remove access or reverse the item once a CRA PE that called the assessment area too narrow is lined up to the same Fair Lending population.
• HMDA LAR validity and quality edits is closer to Temporary compensating control after a CRA PE that called the assessment area too narrow; Remove access or reverse the item would over-claim this Examination and Notices extract.
• Approve a documented exception is still live in HMDA LAR validity and quality edits for CRA strategist in a bank with thin HMDA LAR quality.
• HMDA LAR validity and quality edits is missing the fact CRA strategist needs after a CRA PE that called the assessment area too narrow; stop this Fair Lending close.

Analysis required

• 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 CRA PE that called the assessment area too narrow.
• Flag any disparate-impact table CRA strategist cannot explain from HMDA LAR validity and quality edits.
• For this Fair Lending Examination and Notices file, read HMDA LAR validity and quality edits against a CRA PE that called the assessment area too narrow and write the one fact that would move dealer overlays introduce prohibited for CRA strategist.

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 CRA PE that called the assessment area too narrow). The follow-on Examination and Notices action is what CRA strategist does next: implement the option, assign an owner, and log the missing fact.