Assess whether HMDA data can be relied on for the exam (3f71a7)

Situation

CRA strategist in an institution preparing for a redlining exam has one working extract — CRA assessment-area versus lending footprint — after a SPCP that originated almost no loans to the intended class. If CRA assessment-area versus lending footprint cannot support HMDA data can be relied on, the honest Fair Lending output is hold.

Decision

CRA strategist in an institution preparing for a redlining exam 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 SPCP that originated almost no loans to the intended class.

Hypotheses to test

• CRA assessment-area versus lending footprint reads as Remove access or reverse the item once a SPCP that originated almost no loans to the intended class is lined up to the same Fair Lending population.
• CRA assessment-area versus lending footprint is closer to Temporary compensating control after a SPCP that originated almost no loans to the intended class; Remove access or reverse the item would over-claim this Redlining and HMDA Data extract.
• Approve a documented exception is still live in CRA assessment-area versus lending footprint for CRA strategist in an institution preparing for a redlining exam.
• CRA assessment-area versus lending footprint is missing the fact CRA strategist needs after a SPCP that originated almost no loans to the intended class; stop this Fair Lending close.

Analysis required

• 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 SPCP that originated almost no loans to the intended class.
• Flag any disparate-impact table CRA strategist cannot explain from CRA assessment-area versus lending footprint.
• For this Fair Lending Redlining and HMDA Data file, read CRA assessment-area versus lending footprint 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 CRA strategist.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Redlining and HMDA Data packet (CRA assessment-area versus lending footprint after a SPCP that originated almost no loans to the intended class). Lead with the Fair Lending option CRA assessment-area versus lending footprint can support after a SPCP that originated almost no loans to the intended class, then the two facts that force it, then the Monday action for CRA strategist in an institution preparing for a redlining exam.