Assess whether HMDA data can be relied on for the exam after a vendor score

Situation

The desk packet is appraisal-gap outcomes in majority-minority tracts after a vendor score change with no disparate-impact test. Model-risk partner for credit scoring in a small-business desk using a new vendor score has to name Remove access or reverse the item or Temporary compensating control for this Fair Lending Pricing and Credit Limits file.

Decision

Model-risk partner for credit scoring in a small-business desk using a new vendor score 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 a vendor score change with no disparate-impact test.

Hypotheses to test

• Appraisal-gap outcomes in majority-minority tracts reads as Remove access or reverse the item once a vendor score change with no disparate-impact test is lined up to the same Fair Lending population.
• Appraisal-gap outcomes in majority-minority tracts is closer to Temporary compensating control after a vendor score change with no disparate-impact test; Remove access or reverse the item would over-claim this Pricing and Credit Limits extract.
• Approve a documented exception is still live in appraisal-gap outcomes in majority-minority tracts for model-risk partner for credit scoring in a small-business desk using a new vendor score.
• Appraisal-gap outcomes in majority-minority tracts is missing the fact model-risk partner for credit scoring needs after a vendor score change with no disparate-impact test; stop this Fair Lending close.

Analysis required

• Match the adverse-action language to the facts in appraisal-gap outcomes in majority-minority tracts.
• 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 a vendor score change with no disparate-impact test.
• For this Fair Lending Pricing and Credit Limits file, read appraisal-gap outcomes in majority-minority tracts against a vendor score change with no disparate-impact test and write the one fact that would move HMDA data can be relied on for model-risk partner for credit scoring.

Recommendation