Assess whether HMDA data can be relied on for the exam (1b3a70)

Situation

Adverse-action notice principal-reason sample arrived with a HMDA resubmission that still fails quality edits for model-risk partner for credit scoring. That is a Fair Lending Redlining and HMDA Data decision on HMDA data can be relied on in a credit union rolling out a special-purpose credit program.

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 adverse-action notice principal-reason sample after a HMDA resubmission that still fails quality edits.

Hypotheses to test

• Adverse-action notice principal-reason sample reads as Remove access or reverse the item once a HMDA resubmission that still fails quality edits is lined up to the same Fair Lending population.
• Adverse-action notice principal-reason sample is closer to Temporary compensating control after a HMDA resubmission that still fails quality edits; Remove access or reverse the item would over-claim this Redlining and HMDA Data extract.
• Approve a documented exception is still live in adverse-action notice principal-reason sample for model-risk partner for credit scoring in a credit union rolling out a special-purpose credit program.
• Adverse-action notice principal-reason sample is missing the fact model-risk partner for credit scoring needs after a HMDA resubmission that still fails quality edits; stop this Fair Lending close.

Analysis required

• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from adverse-action notice principal-reason sample.
• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• Match the adverse-action language to the facts in adverse-action notice principal-reason sample.
• For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a HMDA resubmission that still fails quality edits and write the one fact that would move HMDA data can be relied on 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 (adverse-action notice principal-reason sample after a HMDA resubmission that still fails quality edits). If adverse-action notice principal-reason sample cannot force a Fair Lending label under Redlining and HMDA Data, stop. If adverse-action notice principal-reason sample after a HMDA resubmission that still fails quality edits cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending Redlining and HMDA Data close, model-risk partner for credit scoring must do not infer a control or scheme beyond the transaction and entitlement evidence.