Assess whether pricing disparities are justified by legitimate factors

SITUATION A SPCP that originated almost no loans to the intended class put adverse-action notice principal-reason sample in front of model-risk partner for credit scoring in a credit union rolling out a special-purpose credit program. This Fair Lending / Redlining and HMDA Data close is pricing disparities are justified from adverse-action notice principal-reason sample, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

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 SPCP that originated almost no loans to the intended class.

HYPOTHESES TO TEST 1. Adverse-action notice principal-reason sample reads as Remove access or reverse the item once a SPCP that originated almost no loans to the intended class is lined up to the same Fair Lending population. 2. Adverse-action notice principal-reason sample is closer to Temporary compensating control after a SPCP that originated almost no loans to the intended class; Remove access or reverse the item would over-claim this Redlining and HMDA Data extract. 3. Approve a documented exception is still live in adverse-action notice principal-reason sample for model-risk partner for credit scoring in a credit union rolling out a special-purpose credit program. 4. Adverse-action notice principal-reason sample is missing the fact model-risk partner for credit scoring needs after a SPCP that originated almost no loans to the intended class; stop this Fair Lending close.

ANALYSIS REQUIRED 1. Match the adverse-action language to the facts in adverse-action notice principal-reason sample. 2. Check HMDA coding and underwriting policy against pricing disparities are justified. 3. Compare adverse-action notice principal-reason sample to similarly situated files, second-review notes, and reason codes after a SPCP that originated almost no loans to the intended class. 4. For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a SPCP that originated almost no loans to the intended class and write the one fact that would move pricing disparities are justified for model-risk partner for credit scoring.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Redlining and HMDA Data packet (adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class). The follow-on Redlining and HMDA Data action is what model-risk partner for credit scoring does next: implement the option, assign an owner, and log the missing fact.