Whether HMDA data can be relied on for the exam from small-business decline

Situation

An exception rate twice as high for one group after credit controls put small-business decline comparative file set in front of fair-lending officer in a mortgage company after a pricing-regression spike. This Fair Lending / Pricing and Credit Limits close is HMDA data can be relied on from small-business decline comparative file set, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Fair-lending officer 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 an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Authorize Remove access or reverse the item now; small-business decline comparative file set already has the discriminator after an exception rate twice as high for one group after credit controls.
• Keep Temporary compensating control in force until small-business decline comparative file set is completed after an exception rate twice as high for one group after credit controls for fair-lending officer.
• Treat small-business decline comparative file set 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: fair-lending officer does not have the page HMDA data can be relied on turns on in small-business decline comparative file set.

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 an exception rate twice as high for one group after credit controls.
• Flag any disparate-impact table fair-lending officer cannot explain from small-business decline comparative file set.
• For this Fair Lending Pricing and Credit Limits file, read small-business decline comparative file set 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 fair-lending officer.

Recommendation