Assess whether HMDA data can be relied on for the exam (090dc3)

Situation

After a vendor score change with no disparate-impact test, CRA assessment-area versus lending footprint is what second-review underwriter can touch in a lender expanding into majority-minority census tracts. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this CRA and Special-Purpose Programs file.

Decision

Second-review underwriter in a lender expanding into majority-minority census tracts must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using CRA assessment-area versus lending footprint after a vendor score change with no disparate-impact test.

Hypotheses to test

• A vendor score change with no disparate-impact test is noise around an already-controlled CRA and Special-Purpose Programs process in a lender expanding into majority-minority census tracts, given CRA assessment-area versus lending footprint.
• A vendor score change with no disparate-impact test is the event in CRA assessment-area versus lending footprint that forces Remove access or reverse the item for second-review underwriter under Fair Lending.
• CRA assessment-area versus lending footprint shows a one-file miss after a vendor score change with no disparate-impact test, not a CRA and Special-Purpose Programs program failure.
• CRA assessment-area versus lending footprint cannot decide HMDA data can be relied on yet after a vendor score change with no disparate-impact test; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

Analysis required

• Flag any disparate-impact table second-review underwriter cannot explain from CRA assessment-area versus lending footprint.
• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in CRA assessment-area versus lending footprint.
• For this Fair Lending CRA and Special-Purpose Programs file, read CRA assessment-area versus lending footprint 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