Assess whether HMDA data can be relied on for the exam (81cdee)

Situation

A board asking if the bank should settle a matched-pair study put appraisal-gap outcomes in majority-minority tracts in front of community-development lender in a manufactured-housing lender with dealer-originated files. This Fair Lending / Examination and Notices close is HMDA data can be relied on from appraisal-gap outcomes in majority-minority tracts, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using appraisal-gap outcomes in majority-minority tracts after a board asking if the bank should settle a matched-pair study.

Hypotheses to test

• Authorize Remove access or reverse the item now; appraisal-gap outcomes in majority-minority tracts already has the discriminator after a board asking if the bank should settle a matched-pair study.
• Keep Temporary compensating control in force until appraisal-gap outcomes in majority-minority tracts is completed after a board asking if the bank should settle a matched-pair study for community-development lender.
• Treat appraisal-gap outcomes in majority-minority tracts as Approve a documented exception because both readings appear after a board asking if the bank should settle a matched-pair study.
• Refuse a Fair Lending close: community-development lender does not have the page HMDA data can be relied on turns on in appraisal-gap outcomes in majority-minority tracts.

Analysis required

• Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after a board asking if the bank should settle a matched-pair study.
• Flag any disparate-impact table community-development lender cannot explain from appraisal-gap outcomes in majority-minority tracts.
• Test a documented exception versus a pattern a manufactured-housing lender with dealer-originated files must defend.
• For this Fair Lending Examination and Notices file, read appraisal-gap outcomes in majority-minority tracts against a board asking if the bank should settle a matched-pair study and write the one fact that would move HMDA data can be relied on for community-development lender.