Assess whether dealer overlays introduce prohibited steering (a7427f)

Situation

A credit union rolling out a special-purpose credit program cannot treat a vendor score change with no disparate-impact test as color commentary on underwriting exception log by branch. Model-risk partner for credit scoring must close dealer overlays introduce prohibited from that extract under Fair Lending / Redlining and HMDA Data.

Decision

Model-risk partner for credit scoring 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 underwriting exception log by branch after a vendor score change with no disparate-impact test.

Hypotheses to test

• Authorize Remove access or reverse the item now; underwriting exception log by branch already has the discriminator after a vendor score change with no disparate-impact test.
• Keep Temporary compensating control in force until underwriting exception log by branch is completed after a vendor score change with no disparate-impact test for model-risk partner for credit scoring.
• Treat underwriting exception log by branch as Approve a documented exception because both readings appear after a vendor score change with no disparate-impact test.
• Refuse a Fair Lending close: model-risk partner for credit scoring does not have the page dealer overlays introduce prohibited turns on in underwriting exception log by branch.

Analysis required

• Match the adverse-action language to the facts in underwriting exception log by branch.
• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare underwriting exception log by branch to similarly situated files, second-review notes, and reason codes after a vendor score change with no disparate-impact test.
• For this Fair Lending Redlining and HMDA Data file, read underwriting exception log by branch against a vendor score change with no disparate-impact test and write the one fact that would move dealer overlays introduce prohibited for model-risk partner for credit scoring.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Redlining and HMDA Data packet (underwriting exception log by branch after a vendor score change with no disparate-impact test). The follow-on Redlining and HMDA Data action is what model-risk partner for credit scoring does next: implement the option, assign an owner, and log the missing fact.