Assess whether HMDA data can be relied on for the exam (9ad7de)

Situation

Adverse-action notice principal-reason sample arrived with an exception rate twice as high for one group after credit controls for exam-response coordinator. That is a Fair Lending CRA and Special-Purpose Programs decision on HMDA data can be relied on in a manufactured-housing lender with dealer-originated files.

Decision

Exam-response coordinator 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 adverse-action notice principal-reason sample after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Exam-response coordinator can defend Remove access or reverse the item from adverse-action notice principal-reason sample after an exception rate twice as high for one group after credit controls in a Fair Lending challenge.
• Exam-response coordinator cannot defend Remove access or reverse the item from adverse-action notice principal-reason sample; Temporary compensating control is what the extract actually supports after an exception rate twice as high for one group after credit controls.
• An exception rate twice as high for one group after credit controls never reached the population in adverse-action notice principal-reason sample — reopen intake, do not close HMDA data can be relied on.
• Two facts in adverse-action notice principal-reason sample after an exception rate twice as high for one group after credit controls conflict for exam-response coordinator; hold this CRA and Special-Purpose Programs file.

Analysis required

• Match the adverse-action language to the facts in adverse-action notice principal-reason sample.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• Compare adverse-action notice principal-reason sample 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 CRA and Special-Purpose Programs file, read adverse-action notice principal-reason sample against an exception rate twice as high for one group after credit controls and write the one fact that would move HMDA data can be relied on for exam-response coordinator.

Recommendation