Dealer Overlays Introduce Prohibited Steering — Fair Lending

Situation

Model-reason-code mapping that does not match notices arrived with a vendor score change with no disparate-impact test for adverse-action notice operations lead. That is a Fair Lending Pricing and Credit Limits decision on dealer overlays introduce prohibited in a credit union rolling out a special-purpose credit program.

Decision

Adverse-action notice operations lead 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 model-reason-code mapping that does not match notices after a vendor score change with no disparate-impact test.

Hypotheses to test

• Adverse-action notice operations lead can defend Remove access or reverse the item from model-reason-code mapping that does not match notices after a vendor score change with no disparate-impact test in a Fair Lending challenge.
• Adverse-action notice operations lead cannot defend Remove access or reverse the item from model-reason-code mapping that does not match notices; Temporary compensating control is what the extract actually supports after a vendor score change with no disparate-impact test.
• A vendor score change with no disparate-impact test never reached the population in model-reason-code mapping that does not match notices — reopen intake, do not close dealer overlays introduce prohibited.
• Two facts in model-reason-code mapping that does not match notices after a vendor score change with no disparate-impact test conflict for adverse-action notice operations lead; hold this Pricing and Credit Limits file.

Analysis required

• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• Match the adverse-action language to the facts in model-reason-code mapping that does not match notices.
• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• For this Fair Lending Pricing and Credit Limits file, read model-reason-code mapping that does not match notices against a vendor score change with no disparate-impact test and write the one fact that would move dealer overlays introduce prohibited for adverse-action notice operations lead.

Recommendation