Whether a model update needs a fair-lending revalidation from geographic

Situation

In a bank with thin HMDA LAR quality, geographic application and origination heat map is the evidence after a CRA PE that called the assessment area too narrow. Community-development lender has to pick Remove access or reverse the item or Temporary compensating control for this Fair Lending Pricing and Credit Limits close using geographic application and origination heat map.

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 geographic application and origination heat map after a CRA PE that called the assessment area too narrow.

Hypotheses to test

• Authorize Remove access or reverse the item now; geographic application and origination heat map already has the discriminator after a CRA PE that called the assessment area too narrow.
• Keep Temporary compensating control in force until geographic application and origination heat map is completed after a CRA PE that called the assessment area too narrow for community-development lender.
• Treat geographic application and origination heat map as Approve a documented exception because both readings appear after a CRA PE that called the assessment area too narrow.
• Refuse a Fair Lending close: community-development lender does not have the page a model update needs turns on in geographic application and origination heat map.

Analysis required

• Check HMDA coding and underwriting policy against a model update needs.
• Compare geographic application and origination heat map 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 geographic application and origination heat map.
• For this Fair Lending Pricing and Credit Limits file, read geographic application and origination heat map against a CRA PE that called the assessment area too narrow 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 (geographic application and origination heat map after a CRA PE that called the assessment area too narrow). The follow-on Pricing and Credit Limits action is what community-development lender does next: implement the option, assign an owner, and log the missing fact.