Assess whether HMDA data can be relied on for the exam (e5aa4e)

Situation

A notice that cites 'other' as the principal reason 40% of the time put HMDA LAR validity and quality edits in front of community-development lender in an institution preparing for a redlining exam. This Fair Lending / CRA and Special-Purpose Programs close is HMDA data can be relied on from HMDA LAR validity and quality edits, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

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 HMDA LAR validity and quality edits after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• Community-development lender can defend Remove access or reverse the item from HMDA LAR validity and quality edits after a notice that cites 'other' as the principal reason 40% of the time in a Fair Lending challenge.
• Community-development lender cannot defend Remove access or reverse the item from HMDA LAR validity and quality edits; Temporary compensating control is what the extract actually supports after a notice that cites 'other' as the principal reason 40% of the time.
• A notice that cites 'other' as the principal reason 40% of the time never reached the population in HMDA LAR validity and quality edits — reopen intake, do not close HMDA data can be relied on.
• Two facts in HMDA LAR validity and quality edits after a notice that cites 'other' as the principal reason 40% of the time conflict for community-development lender; hold this CRA and Special-Purpose Programs file.

Analysis required

• Flag any disparate-impact table community-development lender cannot explain from HMDA LAR validity and quality edits.
• Test a documented exception versus a pattern an institution preparing for a redlining exam must defend.
• Match the adverse-action language to the facts in HMDA LAR validity and quality edits.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move HMDA data can be relied on for community-development lender.

Recommendation