Assess whether a model update needs a fair-lending revalidation (5fcdef)

Situation

A model update needs sits with model-risk partner for credit scoring because an exception rate twice as high for one group after credit controls hit a lender expanding into majority-minority census tracts. Evidence is manufactured-housing dealer overlay notes; write the Fair Lending Examination and Notices option that extract can carry.

Decision

Model-risk partner for credit scoring in a lender expanding into majority-minority census tracts must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using manufactured-housing dealer overlay notes after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• An exception rate twice as high for one group after credit controls is noise around an already-controlled Examination and Notices process in a lender expanding into majority-minority census tracts, given manufactured-housing dealer overlay notes.
• An exception rate twice as high for one group after credit controls is the event in manufactured-housing dealer overlay notes that forces Remove access or reverse the item for model-risk partner for credit scoring under Fair Lending.
• Manufactured-housing dealer overlay notes shows a one-file miss after an exception rate twice as high for one group after credit controls, not a Examination and Notices program failure.
• Manufactured-housing dealer overlay notes cannot decide a model update needs yet after an exception rate twice as high for one group after credit controls; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

Analysis required

• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from manufactured-housing dealer overlay notes.
• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in manufactured-housing dealer overlay notes.
• For this Fair Lending Examination and Notices file, read manufactured-housing dealer overlay notes against an exception rate twice as high for one group after credit controls and write the one fact that would move a model update needs for model-risk partner for credit scoring.

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