Assess whether pricing disparities are justified by legitimate factors

SITUATION A credit union rolling out a special-purpose credit program cannot treat a CRA PE that called the assessment area too narrow as incidental context on CRA assessment-area versus lending footprint. Model-risk partner for credit scoring must close pricing disparities are justified 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 CRA assessment-area versus lending footprint after a CRA PE that called the assessment area too narrow.

HYPOTHESES TO TEST 1. Model-risk partner for credit scoring can defend Remove access or reverse the item from CRA assessment-area versus lending footprint after a CRA PE that called the assessment area too narrow in a Fair Lending challenge. 2. Model-risk partner for credit scoring cannot defend Remove access or reverse the item from CRA assessment-area versus lending footprint; Temporary compensating control is what the extract actually supports after a CRA PE that called the assessment area too narrow. 3. A CRA PE that called the assessment area too narrow never reached the population in CRA assessment-area versus lending footprint — reopen intake, do not close pricing disparities are justified. 4. Two facts in CRA assessment-area versus lending footprint after a CRA PE that called the assessment area too narrow conflict for model-risk partner for credit scoring; hold this Redlining and HMDA Data file.

ANALYSIS REQUIRED 1. Match the adverse-action language to the facts in CRA assessment-area versus lending footprint. 2. Check HMDA coding and underwriting policy against pricing disparities are justified. 3. Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after a CRA PE that called the assessment area too narrow. 4. For this Fair Lending Redlining and HMDA Data file, read CRA assessment-area versus lending footprint against a CRA PE that called the assessment area too narrow and write the one fact that would move pricing disparities are justified for model-risk partner for credit scoring.

RECOMMENDATION Treat this reading of CRA assessment-area versus lending footprint as the gate for pricing disparities are justified: Match the adverse-action language to the facts in CRA assessment-area versus lending footprint.. If CRA assessment-area versus lending footprint after a CRA PE that called the assessment area too narrow confirms that reading, model-risk partner for credit scoring takes Remove access or reverse the item in a credit union rolling out a special-purpose credit program. If CRA assessment-area versus lending footprint contradicts it, take Temporary compensating control.