Assess whether dealer overlays introduce prohibited steering (af94af)

Situation

After a CRA PE that called the assessment area too narrow, underwriting exception log by branch is what second-review underwriter can touch in a lender expanding into majority-minority census tracts. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this CRA and Special-Purpose Programs file.

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 underwriting exception log by branch after a CRA PE that called the assessment area too narrow.

Hypotheses to test

• The population in underwriting exception log by branch is the one a CRA PE that called the assessment area too narrow named, so Remove access or reverse the item follows for this CRA and Special-Purpose Programs file.
• The population in underwriting exception log by branch is adjacent only to a CRA PE that called the assessment area too narrow; Temporary compensating control is the honest Fair Lending call.
• A lender expanding into majority-minority census tracts already contained a CRA PE that called the assessment area too narrow before underwriting exception log by branch arrived; no new CRA and Special-Purpose Programs path.
• Provenance on underwriting exception log by branch after a CRA PE that called the assessment area too narrow is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

Analysis required

• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in underwriting exception log by branch.
• Check HMDA coding and underwriting policy against dealer overlays introduce prohibited.
• For this Fair Lending CRA and Special-Purpose Programs file, read underwriting exception log by branch against a CRA PE that called the assessment area too narrow and write the one fact that would move dealer overlays introduce prohibited 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 (underwriting exception log by branch after a CRA PE that called the assessment area too narrow). The follow-on CRA and Special-Purpose Programs action is what second-review underwriter does next: implement the option, assign an owner, and log the missing fact.