Assess whether HMDA data can be relied on for the exam (418a21)

Situation

After a marketing mailer that skipped majority-minority tracts, underwriting exception log by branch is what second-review underwriter can touch in a credit union rolling out a special-purpose credit program. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this Examination and Notices file.

Decision

Second-review underwriter in a credit union rolling out a special-purpose credit program must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using underwriting exception log by branch after a marketing mailer that skipped majority-minority tracts.

Hypotheses to test

• Underwriting exception log by branch reads as Remove access or reverse the item once a marketing mailer that skipped majority-minority tracts is lined up to the same Fair Lending population.
• Underwriting exception log by branch is closer to Temporary compensating control after a marketing mailer that skipped majority-minority tracts; Remove access or reverse the item would over-claim this Examination and Notices extract.
• Approve a documented exception is still live in underwriting exception log by branch for second-review underwriter in a credit union rolling out a special-purpose credit program.
• Underwriting exception log by branch is missing the fact second-review underwriter needs after a marketing mailer that skipped majority-minority tracts; stop this Fair Lending close.

Analysis required

• Test a documented exception versus a pattern a credit union rolling out a special-purpose credit program must defend.
• Match the adverse-action language to the facts in underwriting exception log by branch.
• Check HMDA coding and underwriting policy against HMDA data can be relied on.
• For this Fair Lending Examination and Notices file, read underwriting exception log by branch against a marketing mailer that skipped majority-minority tracts and write the one fact that would move HMDA data can be relied on for second-review underwriter.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (underwriting exception log by branch after a marketing mailer that skipped majority-minority tracts). The follow-on Examination and Notices action is what second-review underwriter does next: implement the option, assign an owner, and log the missing fact.