Assess whether a model update needs a fair-lending revalidation (b30c87)

Situation

The desk packet is mortgage pricing residual by prohibited-basis group after a notice that cites 'other' as the principal reason 40% of the time. Adverse-action notice operations lead in a lender expanding into majority-minority census tracts has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending Redlining and HMDA Data file.

Decision

Adverse-action notice operations lead 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 mortgage pricing residual by prohibited-basis group after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• Authorize Remove access or reverse the item now; mortgage pricing residual by prohibited-basis group already has the discriminator after a notice that cites 'other' as the principal reason 40% of the time.
• Keep Temporary compensating control in force until mortgage pricing residual by prohibited-basis group is completed after a notice that cites 'other' as the principal reason 40% of the time for adverse-action notice operations lead.
• Treat mortgage pricing residual by prohibited-basis group as Approve a documented exception because both readings appear after a notice that cites 'other' as the principal reason 40% of the time.
• Refuse a Fair Lending close: adverse-action notice operations lead does not have the page a model update needs turns on in mortgage pricing residual by prohibited-basis group.

Analysis required

• Match the adverse-action language to the facts in mortgage pricing residual by prohibited-basis group.
• Check HMDA coding and underwriting policy against a model update needs.
• Compare mortgage pricing residual by prohibited-basis group to similarly situated files, second-review notes, and reason codes after a notice that cites 'other' as the principal reason 40% of the time.
• For this Fair Lending Redlining and HMDA Data file, read mortgage pricing residual by prohibited-basis group 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 adverse-action notice operations lead.

Recommendation