Assess whether a model update needs a fair-lending revalidation (705b00)

Situation

CRA strategist owns a model update needs inside a bank with thin HMDA LAR quality with geographic application and origination heat map as the only packet. A notice that cites 'other' as the principal reason 40% of the time is what changed the clock for this Fair Lending Examination and Notices file.

Decision

CRA strategist in a bank with thin HMDA LAR quality must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using geographic application and origination heat map after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• A notice that cites 'other' as the principal reason 40% of the time is noise around an already-controlled Examination and Notices process in a bank with thin HMDA LAR quality, given geographic application and origination heat map.
• A notice that cites 'other' as the principal reason 40% of the time is the event in geographic application and origination heat map that forces Remove access or reverse the item for CRA strategist under Fair Lending.
• Geographic application and origination heat map shows a one-file miss after a notice that cites 'other' as the principal reason 40% of the time, not a Examination and Notices program failure.
• Geographic application and origination heat map cannot decide a model update needs yet after a notice that cites 'other' as the principal reason 40% of the time; hold is the only Fair Lending close a bank with thin HMDA LAR quality can defend.

Analysis required

• Test a documented exception versus a pattern a bank with thin HMDA LAR quality must defend.
• 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.
• For this Fair Lending Examination and Notices file, read geographic application and origination heat map 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 CRA strategist.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (geographic application and origination heat map after a notice that cites 'other' as the principal reason 40% of the time). The follow-on Examination and Notices action is what CRA strategist does next: implement the option, assign an owner, and log the missing fact.