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

Situation

Pricing and Credit Limits work in a small-business desk using a new vendor score now turns on a model update needs because a vendor score change with no disparate-impact test put underwriting exception log by branch in play. Model-risk partner for credit scoring should say what underwriting exception log by branch proves.

Decision

Model-risk partner for credit scoring in a small-business desk using a new vendor score must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using underwriting exception log by branch after a vendor score change with no disparate-impact test.

Hypotheses to test

• A vendor score change with no disparate-impact test is noise around an already-controlled Pricing and Credit Limits process in a small-business desk using a new vendor score, given underwriting exception log by branch.
• A vendor score change with no disparate-impact test is the event in underwriting exception log by branch that forces Remove access or reverse the item for model-risk partner for credit scoring under Fair Lending.
• Underwriting exception log by branch shows a one-file miss after a vendor score change with no disparate-impact test, not a Pricing and Credit Limits program failure.
• Underwriting exception log by branch cannot decide a model update needs yet after a vendor score change with no disparate-impact test; hold is the only Fair Lending close a small-business desk using a new vendor score can defend.

Analysis required

• Check HMDA coding and underwriting policy against a model update needs.
• Compare underwriting exception log by branch to similarly situated files, second-review notes, and reason codes after a vendor score change with no disparate-impact test.
• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from underwriting exception log by branch.
• For this Fair Lending Pricing and Credit Limits file, read underwriting exception log by branch against a vendor score change with no disparate-impact test and write the one fact that would move a model update needs for model-risk partner for credit scoring.

Recommendation

A small-business desk using a new vendor score needs a named owner on a model update needs. Assign model-risk partner for credit scoring to execute Remove access or reverse the item when underwriting exception log by branch after a vendor score change with no disparate-impact test is complete, or Temporary compensating control when the Pricing and Credit Limits packet still lacks the discriminator in underwriting exception log by branch.