Assess whether pricing disparities are justified by legitimate factors

SITUATION Appraisal-gap outcomes in majority-minority tracts arrived with a board asking if the bank should settle a matched-pair study for community-development lender. That is a Fair Lending CRA and Special-Purpose Programs decision on pricing disparities are justified in an institution preparing for a redlining exam.

DECISION Community-development lender 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 appraisal-gap outcomes in majority-minority tracts after a board asking if the bank should settle a matched-pair study.

HYPOTHESES TO TEST 1. Authorize Remove access or reverse the item now; appraisal-gap outcomes in majority-minority tracts already has the discriminator after a board asking if the bank should settle a matched-pair study. 2. Keep Temporary compensating control in force until appraisal-gap outcomes in majority-minority tracts is completed after a board asking if the bank should settle a matched-pair study for community-development lender. 3. Treat appraisal-gap outcomes in majority-minority tracts as Approve a documented exception because both readings appear after a board asking if the bank should settle a matched-pair study. 4. Refuse a Fair Lending close: community-development lender does not have the decision pricing disparities are justified turns on in appraisal-gap outcomes in majority-minority tracts.

ANALYSIS REQUIRED 1. Match the adverse-action language to the facts in appraisal-gap outcomes in majority-minority tracts. 2. Check HMDA coding and underwriting policy against pricing disparities are justified. 3. Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after a board asking if the bank should settle a matched-pair study. 4. For this Fair Lending CRA and Special-Purpose Programs file, read appraisal-gap outcomes in majority-minority tracts against a board asking if the bank should settle a matched-pair study and write the one fact that would move pricing disparities are justified for community-development lender.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / CRA and Special-Purpose Programs packet (appraisal-gap outcomes in majority-minority tracts after a board asking if the bank should settle a matched-pair study). If appraisal-gap outcomes in majority-minority tracts cannot force a Fair Lending label under CRA and Special-Purpose Programs, stop. If appraisal-gap outcomes in majority-minority tracts after a board asking if the bank should settle a matched-pair study cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending CRA and Special-Purpose Programs close, community-development lender must do not infer a control or scheme beyond the transaction and entitlement evidence.