Assess whether a model update needs a fair-lending revalidation (bca994)

Situation

After an exception rate twice as high for one group after credit controls, HMDA LAR validity and quality edits is what CRA strategist can touch in a mortgage company after a pricing-regression spike. Fair Lending will live with Remove access or reverse the item versus Temporary compensating control on this CRA and Special-Purpose Programs file.

Decision

CRA strategist in a mortgage company after a pricing-regression spike must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Authorize Remove access or reverse the item now; HMDA LAR validity and quality edits already has the discriminator after an exception rate twice as high for one group after credit controls.
• Keep Temporary compensating control in force until HMDA LAR validity and quality edits is completed after an exception rate twice as high for one group after credit controls for CRA strategist.
• Treat HMDA LAR validity and quality edits as Approve a documented exception because both readings appear after an exception rate twice as high for one group after credit controls.
• Refuse a Fair Lending close: CRA strategist does not have the page a model update needs turns on in HMDA LAR validity and quality edits.

Analysis required

• Check HMDA coding and underwriting policy against a model update needs.
• Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• Flag any disparate-impact table CRA strategist cannot explain from HMDA LAR validity and quality edits.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against an exception rate twice as high for one group after credit controls and write the one fact that would move a model update needs for CRA strategist.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / CRA and Special-Purpose Programs packet (HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls). The follow-on CRA and Special-Purpose Programs action is what CRA strategist does next: implement the option, assign an owner, and log the missing fact.