Assess whether the exam response should concede a finding (aa2125)

SITUATION HMDA LAR validity and quality edits arrived with a vendor score change with no disparate-impact test for community-development lender. That is a Fair Lending CRA and Special-Purpose Programs decision on the exam response should in an institution preparing for a redlining exam.

DECISION Community-development lender in an institution preparing for a redlining exam 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 vendor score change with no disparate-impact test.

HYPOTHESES TO TEST 1. HMDA LAR validity and quality edits reads as Remove access or reverse the item once a vendor score change with no disparate-impact test is lined up to the same Fair Lending population. 2. HMDA LAR validity and quality edits is closer to Temporary compensating control after a vendor score change with no disparate-impact test; Remove access or reverse the item would over-claim this CRA and Special-Purpose Programs extract. 3. Approve a documented exception is still live in HMDA LAR validity and quality edits for community-development lender in an institution preparing for a redlining exam. 4. HMDA LAR validity and quality edits is missing the fact community-development lender needs after a vendor score change with no disparate-impact test; stop this Fair Lending close.

ANALYSIS REQUIRED 1. Check HMDA coding and underwriting policy against the exam response should. 2. Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after a vendor score change with no disparate-impact test. 3. Flag any disparate-impact table community-development lender cannot explain from HMDA LAR validity and quality edits. 4. For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against a vendor score change with no disparate-impact test and write the one fact that would move the exam response should for community-development lender.

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 a vendor score change with no disparate-impact test). The follow-on CRA and Special-Purpose Programs action is what community-development lender does next: implement the option, assign an owner, and log the missing fact.

COMMAND RETURNS - Bottom-line Fair Lending option on the exam response should, then the evidence in HMDA LAR validity and quality edits, then the action for community-development lender - Hypothesis scorecard against HMDA LAR validity and quality edits: supported / rejected / untestable - Regulatory or exam hook CRA and Special-Purpose Programs would cite - CRA and Special-Purpose Programs finding in HMDA LAR validity and quality edits that a second reviewer can re-perform