Assess whether dealer overlays introduce prohibited steering (cb7cb3)

Situation

After a notice that cites 'other' as the principal reason 40% of the time, manufactured-housing dealer overlay notes is what exam-response coordinator can touch in a bank with thin HMDA LAR quality. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this Redlining and HMDA Data file.

Decision

Exam-response coordinator in a bank with thin HMDA LAR quality must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using manufactured-housing dealer overlay notes after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• A notice that cites 'other' as the principal reason 40% of the time is noise around an already-controlled Redlining and HMDA Data process in a bank with thin HMDA LAR quality, given manufactured-housing dealer overlay notes.
• A notice that cites 'other' as the principal reason 40% of the time is the event in manufactured-housing dealer overlay notes that forces Remove access or reverse the item for exam-response coordinator under Fair Lending.
• Manufactured-housing dealer overlay notes shows a one-file miss after a notice that cites 'other' as the principal reason 40% of the time, not a Redlining and HMDA Data program failure.
• Manufactured-housing dealer overlay notes cannot decide dealer overlays introduce prohibited yet after a notice that cites 'other' as the principal reason 40% of the time; hold is the only Fair Lending close a bank with thin HMDA LAR quality can defend.

Analysis required

• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• Compare manufactured-housing dealer overlay notes to similarly situated files, second-review notes, and reason codes after a notice that cites 'other' as the principal reason 40% of the time.
• Flag any disparate-impact table exam-response coordinator cannot explain from manufactured-housing dealer overlay notes.
• For this Fair Lending Redlining and HMDA Data file, read manufactured-housing dealer overlay notes against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move dealer overlays introduce prohibited for exam-response coordinator.

Recommendation