Assess whether a model update needs a fair-lending revalidation (e119b3)

Situation

A model update needs sits with community-development lender because a vendor score change with no disparate-impact test hit a manufactured-housing lender with dealer-originated files. Evidence is manufactured-housing dealer overlay notes; write the Fair Lending Examination and Notices option that extract can carry.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using manufactured-housing dealer overlay notes after a vendor score change with no disparate-impact test.

Hypotheses to test

• A vendor score change with no disparate-impact test is already priced into manufactured-housing dealer overlay notes; community-development lender can take Remove access or reverse the item on a model update needs inside a manufactured-housing lender with dealer-originated files.
• A vendor score change with no disparate-impact test is the event in manufactured-housing dealer overlay notes that forces Temporary compensating control rather than Remove access or reverse the item for this Examination and Notices file.
• Manufactured-housing dealer overlay notes shows a one-file miss after a vendor score change with no disparate-impact test, not a Fair Lending program failure across a manufactured-housing lender with dealer-originated files.
• A model update needs cannot be closed from manufactured-housing dealer overlay notes after a vendor score change with no disparate-impact test; community-development lender should keep Hold in force.

Analysis required

• Match the adverse-action language to the facts in manufactured-housing dealer overlay notes.
• Check HMDA coding and underwriting policy against a model update needs.
• Compare manufactured-housing dealer overlay notes to similarly situated files, second-review notes, and reason codes after a vendor score change with no disparate-impact test.
• For this Fair Lending Examination and Notices file, read manufactured-housing dealer overlay notes against a vendor score change with no disparate-impact test and write the one fact that would move a model update needs for community-development lender.

Recommendation