Assess whether a model update needs a fair-lending revalidation (792961)

Situation

A model update needs sits with community-development lender because an exception rate twice as high for one group after credit controls hit a manufactured-housing lender with dealer-originated files. Evidence is geographic application and origination heat map; write the Fair Lending Examination and Notices option that extract can carry.

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 geographic application and origination heat map after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• The population in geographic application and origination heat map is the one an exception rate twice as high for one group after credit controls named, so Remove access or reverse the item follows for this Examination and Notices file.
• The population in geographic application and origination heat map is adjacent only to an exception rate twice as high for one group after credit controls; Temporary compensating control is the honest Fair Lending call.
• A manufactured-housing lender with dealer-originated files already contained an exception rate twice as high for one group after credit controls before geographic application and origination heat map arrived; no new Examination and Notices path.
• Provenance on geographic application and origination heat map after an exception rate twice as high for one group after credit controls is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

Analysis required

• Match the adverse-action language to the facts in geographic application and origination heat map.
• Check HMDA coding and underwriting policy against a model update needs.
• Compare geographic application and origination heat map to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• For this Fair Lending Examination and Notices file, read geographic application and origination heat map against an exception rate twice as high for one group after credit controls and write the one fact that would move a model update needs for community-development lender.