Assess whether HMDA data can be relied on for the exam (5215ac)

Situation

A notice that cites 'other' as the principal reason 40% of the time put CRA assessment-area versus lending footprint in front of CRA strategist in a bank with thin HMDA LAR quality. This Fair Lending / Examination and Notices close is HMDA data can be relied on from CRA assessment-area versus lending footprint, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

CRA strategist in a bank with thin HMDA LAR quality must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using CRA assessment-area versus lending footprint after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• A notice that cites 'other' as the principal reason 40% of the time is noise around an already-controlled Examination and Notices process in a bank with thin HMDA LAR quality, given CRA assessment-area versus lending footprint.
• A notice that cites 'other' as the principal reason 40% of the time is the event in CRA assessment-area versus lending footprint that forces Remove access or reverse the item for CRA strategist under Fair Lending.
• CRA assessment-area versus lending footprint shows a one-file miss after a notice that cites 'other' as the principal reason 40% of the time, not a Examination and Notices program failure.
• CRA assessment-area versus lending footprint cannot decide HMDA data can be relied on yet after a notice that cites 'other' as the principal reason 40% of the time; hold is the only Fair Lending close a bank with thin HMDA LAR quality can defend.

Analysis required

• Match the adverse-action language to the facts in CRA assessment-area versus lending footprint.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• Compare CRA assessment-area versus lending footprint 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 Examination and Notices file, read CRA assessment-area versus lending footprint 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 CRA strategist.

Recommendation