Assess whether comparative files show second-review bias (a50517)

Situation

The desk packet is manufactured-housing dealer overlay notes after an exception rate twice as high for one group after credit controls. Community-development lender in a manufactured-housing lender with dealer-originated files has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending Examination and Notices file.

Decision

Community-development lender in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using manufactured-housing dealer overlay notes after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• An exception rate twice as high for one group after credit controls is noise around an already-controlled Examination and Notices process in a manufactured-housing lender with dealer-originated files, given manufactured-housing dealer overlay notes.
• An exception rate twice as high for one group after credit controls is the event in manufactured-housing dealer overlay notes that forces Remove access or reverse the item for community-development lender under Fair Lending.
• Manufactured-housing dealer overlay notes shows a one-file miss after an exception rate twice as high for one group after credit controls, not a Examination and Notices program failure.
• Manufactured-housing dealer overlay notes cannot decide comparative files show second-review yet after an exception rate twice as high for one group after credit controls; hold is the only Fair Lending close a manufactured-housing lender with dealer-originated files can defend.

Analysis required

• Match the adverse-action language to the facts in manufactured-housing dealer overlay notes.
• Check HMDA coding and underwriting policy against comparative files show second-review.
• Compare manufactured-housing dealer overlay notes to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• For this Fair Lending Examination and Notices file, read manufactured-housing dealer overlay notes against an exception rate twice as high for one group after credit controls and write the one fact that would move comparative files show second-review for community-development lender.