Assess whether HMDA data can be relied on for the exam from appraisal-gap

Situation

A credit union rolling out a special-purpose credit program cannot treat an underwriter chat that used coded language as color commentary on appraisal-gap outcomes in majority-minority tracts. Adverse-action notice operations lead must close HMDA data can be relied on from that extract under Fair Lending / Pricing and Credit Limits.

Decision

Adverse-action notice operations lead 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 appraisal-gap outcomes in majority-minority tracts after an underwriter chat that used coded language.

Hypotheses to test

• Authorize Remove access or reverse the item now; appraisal-gap outcomes in majority-minority tracts already has the discriminator after an underwriter chat that used coded language.
• Keep Temporary compensating control in force until appraisal-gap outcomes in majority-minority tracts is completed after an underwriter chat that used coded language for adverse-action notice operations lead.
• Treat appraisal-gap outcomes in majority-minority tracts as Approve a documented exception because both readings appear after an underwriter chat that used coded language.
• Refuse a Fair Lending close: adverse-action notice operations lead does not have the page HMDA data can be relied on turns on in appraisal-gap outcomes in majority-minority tracts.

Analysis required

• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after an underwriter chat that used coded language.
• Flag any disparate-impact table adverse-action notice operations lead cannot explain from appraisal-gap outcomes in majority-minority tracts.
• For this Fair Lending Pricing and Credit Limits file, read appraisal-gap outcomes in majority-minority tracts against an underwriter chat that used coded language and write the one fact that would move HMDA data can be relied on for adverse-action notice operations lead.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Pricing and Credit Limits packet (appraisal-gap outcomes in majority-minority tracts after an underwriter chat that used coded language). The follow-on Pricing and Credit Limits action is what adverse-action notice operations lead does next: implement the option, assign an owner, and log the missing fact.