Assess whether a model update needs a fair-lending revalidation (26fb68)

Situation

Fair-lending officer in a bank with thin HMDA LAR quality has one working extract — HMDA LAR validity and quality edits — after a branch that stopped taking applications in one ZIP. If HMDA LAR validity and quality edits cannot support a model update needs, the honest Fair Lending output is hold.

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 HMDA LAR validity and quality edits after a branch that stopped taking applications in one ZIP.

Hypotheses to test

• HMDA LAR validity and quality edits reads as Remove access or reverse the item once a branch that stopped taking applications in one ZIP is lined up to the same Fair Lending population.
• HMDA LAR validity and quality edits is closer to Temporary compensating control after a branch that stopped taking applications in one ZIP; Remove access or reverse the item would over-claim this CRA and Special-Purpose Programs extract.
• Approve a documented exception is still live in HMDA LAR validity and quality edits for fair-lending officer in a bank with thin HMDA LAR quality.
• HMDA LAR validity and quality edits is missing the fact fair-lending officer needs after a branch that stopped taking applications in one ZIP; stop this Fair Lending close.

Analysis required

• 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 HMDA LAR validity and quality edits.
• Check HMDA coding and underwriting policy against a model update needs.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against a branch that stopped taking applications in one ZIP and write the one fact that would move a model update needs 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 (HMDA LAR validity and quality edits after a branch that stopped taking applications in one ZIP). Lead with the Fair Lending option HMDA LAR validity and quality edits can support after a branch that stopped taking applications in one ZIP, then the two facts that force it, then the Monday action for fair-lending officer in a bank with thin HMDA LAR quality.