Assess whether HMDA data can be relied on for the exam (aab895)

Situation

A notice that cites 'other' as the principal reason 40% of the time put small-business decline comparative file set 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 small-business decline comparative file set, 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 small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time.

Hypotheses to test

• CRA strategist can defend Remove access or reverse the item from small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time in a Fair Lending challenge.
• CRA strategist cannot defend Remove access or reverse the item from small-business decline comparative file set; Temporary compensating control is what the extract actually supports after a notice that cites 'other' as the principal reason 40% of the time.
• A notice that cites 'other' as the principal reason 40% of the time never reached the population in small-business decline comparative file set — reopen intake, do not close HMDA data can be relied on.
• Two facts in small-business decline comparative file set after a notice that cites 'other' as the principal reason 40% of the time conflict for CRA strategist; hold this Examination and Notices file.

Analysis required

• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes after a notice that cites 'other' as the principal reason 40% of the time.
• Flag any disparate-impact table CRA strategist cannot explain from small-business decline comparative file set.
• For this Fair Lending Examination and Notices file, read small-business decline comparative file set 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.