Assess whether pricing disparities are justified by legitimate factors

SITUATION Model-risk partner for credit scoring in a lender expanding into majority-minority census tracts has one working extract — SPCP written plan versus actual originations — after a CRA PE that called the assessment area too narrow. Model-risk partner for credit scoring in a lender expanding into majority-minority census tracts has SPCP written plan versus actual originations after a CRA PE that called the assessment area too narrow. If that extract cannot support pricing disparities are justified, the only defensible Fair Lending Examination and Notices output is hold.

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 SPCP written plan versus actual originations after a CRA PE that called the assessment area too narrow.

HYPOTHESES TO TEST 1. Model-risk partner for credit scoring can defend Remove access or reverse the item from SPCP written plan versus actual originations after a CRA PE that called the assessment area too narrow in a Fair Lending challenge. 2. Model-risk partner for credit scoring cannot defend Remove access or reverse the item from SPCP written plan versus actual originations; Temporary compensating control is what the extract actually supports after a CRA PE that called the assessment area too narrow. 3. A CRA PE that called the assessment area too narrow never reached the population in SPCP written plan versus actual originations — reopen intake, do not close pricing disparities are justified. 4. Two facts in SPCP written plan versus actual originations after a CRA PE that called the assessment area too narrow conflict for model-risk partner for credit scoring; hold this Examination and Notices file.

ANALYSIS REQUIRED 1. Compare SPCP written plan versus actual originations to similarly situated files, second-review notes, and reason codes after a CRA PE that called the assessment area too narrow. 2. Flag any disparate-impact table model-risk partner for credit scoring cannot explain from SPCP written plan versus actual originations. 3. Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend. 4. For this Fair Lending Examination and Notices file, read SPCP written plan versus actual originations against a CRA PE that called the assessment area too narrow and write the one fact that would move pricing disparities are justified for model-risk partner for credit scoring.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (SPCP written plan versus actual originations after a CRA PE that called the assessment area too narrow). The follow-on Examination and Notices action is what model-risk partner for credit scoring does next: implement the option, assign an owner, and log the missing fact.