Assess whether HMDA data can be relied on for the exam (1fbe98)

Situation

Model-risk partner for credit scoring owns HMDA data can be relied on inside a credit union rolling out a special-purpose credit program with adverse-action notice principal-reason sample as the only packet. A SPCP that originated almost no loans to the intended class is what changed the clock for this Fair Lending Redlining and HMDA Data file.

Decision

Model-risk partner for credit scoring 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 adverse-action notice principal-reason sample after a SPCP that originated almost no loans to the intended class.

Hypotheses to test

• Authorize Remove access or reverse the item now; adverse-action notice principal-reason sample already has the discriminator after a SPCP that originated almost no loans to the intended class.
• Keep Temporary compensating control in force until adverse-action notice principal-reason sample is completed after a SPCP that originated almost no loans to the intended class for model-risk partner for credit scoring.
• Treat adverse-action notice principal-reason sample as Approve a documented exception because both readings appear after a SPCP that originated almost no loans to the intended class.
• Refuse a Fair Lending close: model-risk partner for credit scoring does not have the page HMDA data can be relied on turns on in adverse-action notice principal-reason sample.

Analysis required

• Compare adverse-action notice principal-reason sample to similarly situated files, second-review notes, and reason codes after a SPCP that originated almost no loans to the intended class.
• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from adverse-action notice principal-reason sample.
• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• For this Fair Lending Redlining and HMDA Data file, read adverse-action notice principal-reason sample against a SPCP that originated almost no loans to the intended class and write the one fact that would move HMDA data can be relied on for model-risk partner for credit scoring.

Recommendation