Assess whether HMDA data can be relied on for the exam (5439ff)

Situation

HMDA LAR validity and quality edits arrived with a vendor score change with no disparate-impact test for exam-response coordinator. That is a Fair Lending Pricing and Credit Limits decision on HMDA data can be relied on in an institution preparing for a redlining exam.

Decision

Exam-response coordinator 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 vendor score change with no disparate-impact test.

Hypotheses to test

• Exam-response coordinator can defend Remove access or reverse the item from HMDA LAR validity and quality edits after a vendor score change with no disparate-impact test in a Fair Lending challenge.
• Exam-response coordinator 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 vendor score change with no disparate-impact test.
• A vendor score change with no disparate-impact test 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 vendor score change with no disparate-impact test conflict for exam-response coordinator; hold this Pricing and Credit Limits file.

Analysis required

• Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after a vendor score change with no disparate-impact test.
• Flag any disparate-impact table exam-response coordinator 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.
• For this Fair Lending Pricing and Credit Limits file, read HMDA LAR validity and quality edits 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 exam-response coordinator.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Pricing and Credit Limits packet (HMDA LAR validity and quality edits after a vendor score change with no disparate-impact test). The follow-on Pricing and Credit Limits action is what exam-response coordinator does next: implement the option, assign an owner, and log the missing fact.