Assess whether dealer overlays introduce prohibited steering (bb705c)

Situation

An institution preparing for a redlining exam cannot treat a notice that cites 'other' as the principal reason 40% of the time as color commentary on model-reason-code mapping that does not match notices. Fair-lending officer must close dealer overlays introduce prohibited from that extract under Fair Lending / Examination and Notices.

Decision

Fair-lending officer 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 model-reason-code mapping that does not match notices 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 an institution preparing for a redlining exam, given model-reason-code mapping that does not match notices.
• A notice that cites 'other' as the principal reason 40% of the time is the event in model-reason-code mapping that does not match notices that forces Remove access or reverse the item for fair-lending officer under Fair Lending.
• Model-reason-code mapping that does not match notices 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.
• Model-reason-code mapping that does not match notices cannot decide dealer overlays introduce prohibited yet after a notice that cites 'other' as the principal reason 40% of the time; hold is the only Fair Lending close an institution preparing for a redlining exam can defend.

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 notice that cites 'other' as the principal reason 40% of the time.
• Flag any disparate-impact table fair-lending officer 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 notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move dealer overlays introduce prohibited for fair-lending officer.