Assess whether HMDA data can be relied on for the exam (1ba215)

Situation

After a vendor score change with no disparate-impact test, small-business decline comparative file set is what fair-lending officer can touch in a bank with thin HMDA LAR quality. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this CRA and Special-Purpose Programs file.

Decision

Fair-lending officer in a bank with thin HMDA LAR quality 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 vendor score change with no disparate-impact test.

Hypotheses to test

• Authorize Remove access or reverse the item now; small-business decline comparative file set already has the discriminator after a vendor score change with no disparate-impact test.
• Keep Temporary compensating control in force until small-business decline comparative file set is completed after a vendor score change with no disparate-impact test for fair-lending officer.
• Treat small-business decline comparative file set as Approve a documented exception because both readings appear after a vendor score change with no disparate-impact test.
• 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

• Flag any disparate-impact table fair-lending officer cannot explain from small-business decline comparative file set.
• Test a documented exception versus a pattern a bank with thin HMDA LAR quality must defend.
• Match the adverse-action language to the facts in small-business decline comparative file set.
• For this Fair Lending CRA and Special-Purpose Programs file, read small-business decline comparative file set 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 fair-lending officer.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / CRA and Special-Purpose Programs packet (small-business decline comparative file set after a vendor score change with no disparate-impact test). The follow-on CRA and Special-Purpose Programs action is what fair-lending officer does next: implement the option, assign an owner, and log the missing fact.