Assess whether pricing disparities are justified by legitimate factors

SITUATION Small-business decline comparative file set arrived with a CRA PE that called the assessment area too narrow for second-review underwriter. That is a Fair Lending CRA and Special-Purpose Programs decision on pricing disparities are justified in a lender expanding into majority-minority census tracts.

DECISION Second-review underwriter 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 small-business decline comparative file set after a CRA PE that called the assessment area too narrow.

HYPOTHESES TO TEST 1. Read small-business decline comparative file set after a CRA PE that called the assessment area too narrow as Remove access or reverse the item if the CRA and Special-Purpose Programs trail second-review underwriter needs for pricing disparities are justified is complete. 2. Read small-business decline comparative file set after a CRA PE that called the assessment area too narrow as Temporary compensating control if the CRA and Special-Purpose Programs trail is present but points the other way. 3. A CRA PE that called the assessment area too narrow did not change the Fair Lending inventory in a lender expanding into majority-minority census tracts; small-business decline comparative file set is commentary, not a new close. 4. Pricing disparities are justified stays open because small-business decline comparative file set after a CRA PE that called the assessment area too narrow never names the discriminator second-review underwriter would defend.

ANALYSIS REQUIRED 1. Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes after a CRA PE that called the assessment area too narrow. 2. Flag any disparate-impact table second-review underwriter cannot explain from small-business decline comparative file set. 3. Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend. 4. For this Fair Lending CRA and Special-Purpose Programs file, read small-business decline comparative file set against a CRA PE that called the assessment area too narrow and write the one fact that would move pricing disparities are justified for second-review underwriter.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / CRA and Special-Purpose Programs packet (small-business decline comparative file set after a CRA PE that called the assessment area too narrow). If small-business decline comparative file set cannot force a Fair Lending label under CRA and Special-Purpose Programs, stop. If small-business decline comparative file set after a CRA PE that called the assessment area too narrow cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending CRA and Special-Purpose Programs close, second-review underwriter must do not infer a control or scheme beyond the transaction and entitlement evidence.