Assess whether HMDA data can be relied on for the exam (370dd7)

Situation

After a CRA PE that called the assessment area too narrow, small-business decline comparative file set is what community-development lender can touch in a mortgage company after a pricing-regression spike. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this Redlining and HMDA Data file.

Decision

Community-development lender in a mortgage company after a pricing-regression spike must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using small-business decline comparative file set after a CRA PE that called the assessment area too narrow.

Hypotheses to test

• A CRA PE that called the assessment area too narrow is noise around an already-controlled Redlining and HMDA Data process in a mortgage company after a pricing-regression spike, given small-business decline comparative file set.
• A CRA PE that called the assessment area too narrow is the event in small-business decline comparative file set that forces Remove access or reverse the item for community-development lender under Fair Lending.
• Small-business decline comparative file set shows a one-file miss after a CRA PE that called the assessment area too narrow, not a Redlining and HMDA Data program failure.
• Small-business decline comparative file set cannot decide HMDA data can be relied on yet after a CRA PE that called the assessment area too narrow; hold is the only Fair Lending close a mortgage company after a pricing-regression spike can defend.

Analysis required

• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes after a CRA PE that called the assessment area too narrow.
• Flag any disparate-impact table community-development lender cannot explain from small-business decline comparative file set.
• For this Fair Lending Redlining and HMDA Data file, read small-business decline comparative file set against a CRA PE that called the assessment area too narrow and write the one fact that would move HMDA data can be relied on for community-development lender.

Recommendation