Whether a model update needs a fair-lending revalidation from appraisal-gap

Situation

Appraisal-gap outcomes in majority-minority tracts arrived with a branch that stopped taking applications in one ZIP for community-development lender. That is a Fair Lending Pricing and Credit Limits decision on a model update needs in a bank with thin HMDA LAR quality.

Decision

Community-development lender 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 appraisal-gap outcomes in majority-minority tracts after a branch that stopped taking applications in one ZIP.

Hypotheses to test

• Authorize Remove access or reverse the item now; appraisal-gap outcomes in majority-minority tracts already has the discriminator after a branch that stopped taking applications in one ZIP.
• Keep Temporary compensating control in force until appraisal-gap outcomes in majority-minority tracts is completed after a branch that stopped taking applications in one ZIP for community-development lender.
• Treat appraisal-gap outcomes in majority-minority tracts as Approve a documented exception because both readings appear after a branch that stopped taking applications in one ZIP.
• Refuse a Fair Lending close: community-development lender does not have the page a model update needs turns on in appraisal-gap outcomes in majority-minority tracts.

Analysis required

• Match the adverse-action language to the facts in appraisal-gap outcomes in majority-minority tracts.
• Check HMDA coding and underwriting policy against a model update needs.
• Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after a branch that stopped taking applications in one ZIP.
• For this Fair Lending Pricing and Credit Limits file, read appraisal-gap outcomes in majority-minority tracts against a branch that stopped taking applications in one ZIP and write the one fact that would move a model update needs for community-development lender.

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 (appraisal-gap outcomes in majority-minority tracts after a branch that stopped taking applications in one ZIP). If appraisal-gap outcomes in majority-minority tracts cannot force a Fair Lending label under Pricing and Credit Limits, stop. Do not invent pages a bank with thin HMDA LAR quality does not have.