Assess whether comparative files show second-review bias (f85319)

Situation

Comparative files show second-review sits with model-risk partner for credit scoring because a branch that stopped taking applications in one ZIP hit a lender expanding into majority-minority census tracts. Evidence is geographic application and origination heat map; write the Fair Lending Examination and Notices option that extract can carry.

Decision

Model-risk partner for credit scoring in a lender expanding into majority-minority census tracts 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 branch that stopped taking applications in one ZIP.

Hypotheses to test

• A branch that stopped taking applications in one ZIP is noise around an already-controlled Examination and Notices process in a lender expanding into majority-minority census tracts, given geographic application and origination heat map.
• A branch that stopped taking applications in one ZIP is the event in geographic application and origination heat map that forces Remove access or reverse the item for model-risk partner for credit scoring under Fair Lending.
• Geographic application and origination heat map shows a one-file miss after a branch that stopped taking applications in one ZIP, not a Examination and Notices program failure.
• Geographic application and origination heat map cannot decide comparative files show second-review yet after a branch that stopped taking applications in one ZIP; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

Analysis required

• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in geographic application and origination heat map.
• Check HMDA coding and underwriting policy against comparative files show second-review.
• For this Fair Lending Examination and Notices file, read geographic application and origination heat map against a branch that stopped taking applications in one ZIP and write the one fact that would move comparative files show second-review for model-risk partner for credit scoring.

Recommendation