Assess whether a model update needs a fair-lending revalidation (a99664)

Situation

In an institution preparing for a redlining exam, small-business decline comparative file set is the evidence after a notice that cites 'other' as the principal reason 40% of the time. Community-development lender has to pick Remove access or reverse the item or Temporary compensating control for this Fair Lending CRA and Special-Purpose Programs close using small-business decline comparative file set.

Decision

Community-development lender in an institution preparing for a redlining exam must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• Small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time supports Remove access or reverse the item for a model update needs if community-development lender can match the same CRA and Special-Purpose Programs population in an institution preparing for a redlining exam.
• Small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time is closer to Temporary compensating control; calling Remove access or reverse the item would over-claim this Fair Lending extract.
• Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes a is still a live third reading of small-business decline comparative file set that community-development lender has not closed.
• Small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time does not yet name the fact a model update needs turns on, so community-development lender should leave Fair Lending unresolved.

Analysis required

• Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes after a notice that cites 'other' as the principal reason 40% of the time.
• Flag any disparate-impact table community-development lender cannot explain from small-business decline comparative file set.
• Test a documented exception versus a pattern an institution preparing for a redlining exam must defend.
• For this Fair Lending CRA and Special-Purpose Programs file, read small-business decline comparative file set against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move a model update needs for community-development lender.