Assess whether HMDA data can be relied on for the exam (2eb079)

Situation

The desk packet is mortgage pricing residual by prohibited-basis group after a vendor score change with no disparate-impact test. Second-review underwriter in a credit union rolling out a special-purpose credit program has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending Examination and Notices file.

Decision

Second-review underwriter in a credit union rolling out a special-purpose credit program must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using mortgage pricing residual by prohibited-basis group 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 Examination and Notices process in a credit union rolling out a special-purpose credit program, given mortgage pricing residual by prohibited-basis group.
• A vendor score change with no disparate-impact test is the event in mortgage pricing residual by prohibited-basis group that forces Remove access or reverse the item for second-review underwriter under Fair Lending.
• Mortgage pricing residual by prohibited-basis group shows a one-file miss after a vendor score change with no disparate-impact test, not a Examination and Notices program failure.
• Mortgage pricing residual by prohibited-basis group 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 credit union rolling out a special-purpose credit program can defend.

Analysis required

• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• Match the adverse-action language to the facts in mortgage pricing residual by prohibited-basis group.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• For this Fair Lending Examination and Notices file, read mortgage pricing residual by prohibited-basis group 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

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (mortgage pricing residual by prohibited-basis group after a vendor score change with no disparate-impact test). The follow-on Examination and Notices action is what second-review underwriter does next: implement the option, assign an owner, and log the missing fact.