Assess whether a model update needs a fair-lending revalidation (72646d)

Situation

A model update needs sits with fair-lending officer because a DOJ or CFPB monitor request for pricing files hit an institution preparing for a redlining exam. Evidence is CRA assessment-area versus lending footprint; write the Fair Lending Examination and Notices option that extract can carry.

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 CRA assessment-area versus lending footprint after a DOJ or CFPB monitor request for pricing files.

Hypotheses to test

• A DOJ or CFPB monitor request for pricing files is noise around an already-controlled Examination and Notices process in an institution preparing for a redlining exam, given CRA assessment-area versus lending footprint.
• A DOJ or CFPB monitor request for pricing files is the event in CRA assessment-area versus lending footprint that forces Remove access or reverse the item for fair-lending officer under Fair Lending.
• CRA assessment-area versus lending footprint shows a one-file miss after a DOJ or CFPB monitor request for pricing files, not a Examination and Notices program failure.
• CRA assessment-area versus lending footprint cannot decide a model update needs yet after a DOJ or CFPB monitor request for pricing files; 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 a model update needs.
• Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after a DOJ or CFPB monitor request for pricing files.
• Flag any disparate-impact table fair-lending officer cannot explain from CRA assessment-area versus lending footprint.
• For this Fair Lending Examination and Notices file, read CRA assessment-area versus lending footprint against a DOJ or CFPB monitor request for pricing files and write the one fact that would move a model update needs for fair-lending officer.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (CRA assessment-area versus lending footprint after a DOJ or CFPB monitor request for pricing files). Lead with the Fair Lending option CRA assessment-area versus lending footprint can support after a DOJ or CFPB monitor request for pricing files, then the two facts that force it, then the Monday action for fair-lending officer in an institution preparing for a redlining exam.