Assess whether HMDA data can be relied on for the exam (621ba1)

Situation

An institution preparing for a redlining exam cannot treat an exception rate twice as high for one group after credit controls as color commentary on CRA assessment-area versus lending footprint. Community-development lender must close HMDA data can be relied on from that extract under Fair Lending / CRA and Special-Purpose Programs.

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 CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Authorize Remove access or reverse the item now; CRA assessment-area versus lending footprint already has the discriminator after an exception rate twice as high for one group after credit controls.
• Keep Temporary compensating control in force until CRA assessment-area versus lending footprint is completed after an exception rate twice as high for one group after credit controls for community-development lender.
• Treat CRA assessment-area versus lending footprint as Approve a documented exception because both readings appear after an exception rate twice as high for one group after credit controls.
• Refuse a Fair Lending close: community-development lender does not have the page HMDA data can be relied on turns on in CRA assessment-area versus lending footprint.

Analysis required

• Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• Flag any disparate-impact table community-development lender cannot explain from CRA assessment-area versus lending footprint.
• Test a documented exception versus a pattern an institution preparing for a redlining exam must defend.
• For this Fair Lending CRA and Special-Purpose Programs file, read CRA assessment-area versus lending footprint against an exception rate twice as high for one group after credit controls and write the one fact that would move HMDA data can be relied on 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 (CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls). If CRA assessment-area versus lending footprint cannot force a Fair Lending label under CRA and Special-Purpose Programs, stop. If CRA assessment-area versus lending footprint after an exception rate twice as high for one group after credit controls cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending CRA and Special-Purpose Programs close, community-development lender must do not infer a control or scheme beyond the transaction and entitlement evidence.