Assess whether dealer overlays introduce prohibited steering (276432)

Situation

After a community complaint about appraisal gaps, model-reason-code mapping that does not match notices is what community-development lender can touch in a manufactured-housing lender with dealer-originated files. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this Examination and Notices file.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using model-reason-code mapping that does not match notices after a community complaint about appraisal gaps.

Hypotheses to test

• The population in model-reason-code mapping that does not match notices is the one a community complaint about appraisal gaps named, so Remove access or reverse the item follows for this Examination and Notices file.
• The population in model-reason-code mapping that does not match notices is adjacent only to a community complaint about appraisal gaps; Temporary compensating control is the honest Fair Lending call.
• A manufactured-housing lender with dealer-originated files already contained a community complaint about appraisal gaps before model-reason-code mapping that does not match notices arrived; no new Examination and Notices path.
• Provenance on model-reason-code mapping that does not match notices after a community complaint about appraisal gaps is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

Analysis required

• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare model-reason-code mapping that does not match notices to similarly situated files, second-review notes, and reason codes after a community complaint about appraisal gaps.
• Flag any disparate-impact table community-development lender cannot explain from model-reason-code mapping that does not match notices.
• For this Fair Lending Examination and Notices file, read model-reason-code mapping that does not match notices against a community complaint about appraisal gaps and write the one fact that would move dealer overlays introduce prohibited for community-development lender.

Recommendation