Assess whether HMDA data can be relied on for the exam (dab451)

Situation

The CRA and Special-Purpose Programs desk packet is adverse-action notice principal-reason sample after a notice that cites 'other' as the principal reason 40% of the time. Second-review underwriter in a lender expanding into majority-minority census tracts must name Remove access or reverse the item or Temporary compensating control for this Fair Lending file. Second-review underwriter in a lender expanding into majority-minority census tracts has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending 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 adverse-action notice principal-reason sample after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• Adverse-action notice principal-reason sample reads as Remove access or reverse the item once a notice that cites 'other' as the principal reason 40% of the time is lined up to the same Fair Lending population.
• Adverse-action notice principal-reason sample is closer to Temporary compensating control after a notice that cites 'other' as the principal reason 40% of the time; Remove access or reverse the item would over-claim this CRA and Special-Purpose Programs extract.
• Approve a documented exception is still live in adverse-action notice principal-reason sample for second-review underwriter in a lender expanding into majority-minority census tracts.
• Adverse-action notice principal-reason sample is missing the fact second-review underwriter needs after a notice that cites 'other' as the principal reason 40% of the time; stop this Fair Lending close.

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 a notice that cites 'other' as the principal reason 40% of the time.
• For this Fair Lending CRA and Special-Purpose Programs file, read adverse-action notice principal-reason sample against a notice that cites 'other' as the principal reason 40% of the time and write the one fact that would move HMDA data can be relied on for second-review underwriter.