Assess whether dealer overlays introduce prohibited steering (ab56c2)

Situation

After a notice that cites 'other' as the principal reason 40% of the time, HMDA LAR validity and quality edits is what adverse-action notice operations lead 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 Redlining and HMDA Data file.

Decision

Adverse-action notice operations lead 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 a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• The population in HMDA LAR validity and quality edits is the one a notice that cites 'other' as the principal reason 40% of the time named, so Remove access or reverse the item follows for this Redlining and HMDA Data file.
• The population in HMDA LAR validity and quality edits is adjacent only to a notice that cites 'other' as the principal reason 40% of the time; Temporary compensating control is the honest Fair Lending call.
• A lender expanding into majority-minority census tracts already contained a notice that cites 'other' as the principal reason 40% of the time before HMDA LAR validity and quality edits arrived; no new Redlining and HMDA Data path.
• Provenance on HMDA LAR validity and quality edits after a notice that cites 'other' as the principal reason 40% of the time 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 notice that cites 'other' as the principal reason 40% of the time.
• For this Fair Lending Redlining and HMDA Data file, read HMDA LAR validity and quality edits against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move dealer overlays introduce prohibited for adverse-action notice operations lead.

Recommendation