Assess whether HMDA data can be relied on for the exam (57c8be)

Situation

Adverse-action notice principal-reason sample arrived with a vendor score change with no disparate-impact test for second-review underwriter. That is a Fair Lending Redlining and HMDA Data decision on HMDA data can be relied on in a small-business desk using a new vendor score.

Decision

Second-review underwriter in a small-business desk using a new vendor score 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 vendor score change with no disparate-impact test.

Hypotheses to test

• Adverse-action notice principal-reason sample 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.
• Adverse-action notice principal-reason sample 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 Redlining and HMDA Data extract.
• Approve a documented exception is still live in adverse-action notice principal-reason sample for second-review underwriter in a small-business desk using a new vendor score.
• Adverse-action notice principal-reason sample is missing the fact second-review underwriter needs after a vendor score change with no disparate-impact test; stop this Fair Lending close.

Analysis required

• Test a documented exception versus a pattern a small-business desk using a new vendor score must defend.
• Match the adverse-action language to the facts in adverse-action notice principal-reason sample.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a vendor score change with no disparate-impact test and write the one fact that would move HMDA data can be relied on for second-review underwriter.

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 vendor score change with no disparate-impact test). Lead with the Fair Lending option adverse-action notice principal-reason sample can support after a vendor score change with no disparate-impact test, then the two facts that force it, then the Monday action for second-review underwriter in a small-business desk using a new vendor score.