Assess whether dealer overlays introduce prohibited steering (d56e35)

Situation

A credit union rolling out a special-purpose credit program cannot treat a branch that stopped taking applications in one ZIP as color commentary on adverse-action notice principal-reason sample. Model-risk partner for credit scoring must close dealer overlays introduce prohibited from that extract under Fair Lending / Redlining and HMDA Data.

Decision

Model-risk partner for credit scoring in a credit union rolling out a special-purpose credit program must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using adverse-action notice principal-reason sample after a branch that stopped taking applications in one ZIP.

Hypotheses to test

• Model-risk partner for credit scoring can defend Remove access or reverse the item from adverse-action notice principal-reason sample after a branch that stopped taking applications in one ZIP in a Fair Lending challenge.
• Model-risk partner for credit scoring cannot defend Remove access or reverse the item from adverse-action notice principal-reason sample; Temporary compensating control is what the extract actually supports after a branch that stopped taking applications in one ZIP.
• A branch that stopped taking applications in one ZIP never reached the population in adverse-action notice principal-reason sample — reopen intake, do not close dealer overlays introduce prohibited.
• Two facts in adverse-action notice principal-reason sample after a branch that stopped taking applications in one ZIP conflict for model-risk partner for credit scoring; hold this Redlining and HMDA Data file.

Analysis required

• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare adverse-action notice principal-reason sample to similarly situated files, second-review notes, and reason codes after a branch that stopped taking applications in one ZIP.
• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from adverse-action notice principal-reason sample.
• For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a branch that stopped taking applications in one ZIP and write the one fact that would move dealer overlays introduce prohibited for model-risk partner for credit scoring.