Assess whether HMDA data can be relied on for the exam (ea2059)

Situation

A vendor score change with no disparate-impact test put geographic application and origination heat map in front of community-development lender in an institution preparing for a redlining exam. This Fair Lending / CRA and Special-Purpose Programs close is HMDA data can be relied on from geographic application and origination heat map, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Community-development lender 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 geographic application and origination heat map after a vendor score change with no disparate-impact test.

Hypotheses to test

• A vendor score change with no disparate-impact test is noise around an already-controlled CRA and Special-Purpose Programs process in an institution preparing for a redlining exam, given geographic application and origination heat map.
• A vendor score change with no disparate-impact test is the event in geographic application and origination heat map that forces Remove access or reverse the item for community-development lender under Fair Lending.
• Geographic application and origination heat map shows a one-file miss after a vendor score change with no disparate-impact test, not a CRA and Special-Purpose Programs program failure.
• Geographic application and origination heat map cannot decide HMDA data can be relied on yet after a vendor score change with no disparate-impact test; hold is the only Fair Lending close an institution preparing for a redlining exam can defend.

Analysis required

• Test a documented exception versus a pattern an institution preparing for a redlining exam must defend.
• Match the adverse-action language to the facts in geographic application and origination heat map.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• For this Fair Lending CRA and Special-Purpose Programs file, read geographic application and origination heat map 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 community-development lender.

Recommendation