Assess whether the exam response should concede a finding (675471)

SITUATION A SPCP that originated almost no loans to the intended class put manufactured-housing dealer overlay notes in front of second-review underwriter in a credit union rolling out a special-purpose credit program. This Fair Lending / Examination and Notices decision is the exam response should from manufactured-housing dealer overlay notes, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

DECISION Second-review underwriter 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 manufactured-housing dealer overlay notes after a SPCP that originated almost no loans to the intended class.

HYPOTHESES TO TEST 1. Second-review underwriter can defend Remove access or reverse the item from manufactured-housing dealer overlay notes after a SPCP that originated almost no loans to the intended class in a Fair Lending challenge. 2. Second-review underwriter cannot defend Remove access or reverse the item from manufactured-housing dealer overlay notes; Temporary compensating control is what the extract actually supports after a SPCP that originated almost no loans to the intended class. 3. A SPCP that originated almost no loans to the intended class never reached the population in manufactured-housing dealer overlay notes — reopen intake, do not close the exam response should. 4. Two facts in manufactured-housing dealer overlay notes after a SPCP that originated almost no loans to the intended class conflict for second-review underwriter; hold this Examination and Notices file.

ANALYSIS REQUIRED 1. Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend. 2. Match the adverse-action language to the facts in manufactured-housing dealer overlay notes. 3. Check HMDA coding and underwriting policy against the exam response should. 4. For this Fair Lending Examination and Notices file, read manufactured-housing dealer overlay notes against a SPCP that originated almost no loans to the intended class and write the one fact that would move the exam response should for second-review underwriter.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (manufactured-housing dealer overlay notes after a SPCP that originated almost no loans to the intended class). Lead with the Fair Lending option manufactured-housing dealer overlay notes can support after a SPCP that originated almost no loans to the intended class, then the two facts that force it, then the Monday action for second-review underwriter in a credit union rolling out a special-purpose credit program.