Assess whether a model update needs a fair-lending revalidation (e99442)

Situation

A model update needs sits with CRA strategist because a SPCP that originated almost no loans to the intended class hit an institution preparing for a redlining exam. Evidence is adverse-action notice principal-reason sample; write the Fair Lending Redlining and HMDA Data option that extract can carry.

Decision

CRA strategist 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 adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class.

Hypotheses to test

• CRA strategist can defend Remove access or reverse the item from adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class in a Fair Lending challenge.
• CRA strategist cannot defend Remove access or reverse the item from adverse-action notice principal-reason sample; Temporary compensating control is what the extract actually supports after a SPCP that originated almost no loans to the intended class.
• A SPCP that originated almost no loans to the intended class never reached the population in adverse-action notice principal-reason sample — reopen intake, do not close a model update needs.
• Two facts in adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class conflict for CRA strategist; hold this Redlining and HMDA Data file.

Analysis required

• Compare adverse-action notice principal-reason sample to similarly situated files, second-review notes, and reason codes after a SPCP that originated almost no loans to the intended class.
• Flag any disparate-impact table CRA strategist cannot explain from adverse-action notice principal-reason sample.
• Test a documented exception versus a pattern an institution preparing for a redlining exam must defend.
• For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a SPCP that originated almost no loans to the intended class and write the one fact that would move a model update needs for CRA strategist.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Redlining and HMDA Data packet (adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class). Lead with the Fair Lending option adverse-action notice principal-reason sample can support after a SPCP that originated almost no loans to the intended class, then the two facts that force it, then the Monday action for CRA strategist in an institution preparing for a redlining exam.