Special-purpose Program: Well Designed or Pretext — Fair Lending

Situation

HMDA data-quality manager in a lender expanding into majority-minority census tracts has one working extract — CRA assessment-area versus lending footprint — after an exception rate twice as high for one group after credit controls. If CRA assessment-area versus lending footprint cannot support a special-purpose program is, the honest Fair Lending output is hold.

Decision

HMDA data-quality manager in a lender expanding into majority-minority census tracts must choose A special-purpose program is well designed / A pretext using CRA assessment-area versus lending footprint 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 Pricing and Credit Limits process in a lender expanding into majority-minority census tracts, given CRA assessment-area versus lending footprint.
• An exception rate twice as high for one group after credit controls is the event in CRA assessment-area versus lending footprint that forces A special-purpose program is well designed for HMDA data-quality manager under Fair Lending.
• CRA assessment-area versus lending footprint shows a one-file miss after an exception rate twice as high for one group after credit controls, not a Pricing and Credit Limits program failure.
• CRA assessment-area versus lending footprint cannot decide a special-purpose program is 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

• Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• Flag any disparate-impact table HMDA data-quality manager cannot explain from CRA assessment-area versus lending footprint.
• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• For this Fair Lending Pricing and Credit Limits file, read CRA assessment-area versus lending footprint against an exception rate twice as high for one group after credit controls and write the one fact that would move a special-purpose program is for HMDA data-quality manager.