Assess whether a model update needs a fair-lending revalidation (790ba0)

Situation

A model update needs sits with fair-lending officer because a CRA PE that called the assessment area too narrow hit a bank with thin HMDA LAR quality. Evidence is HMDA LAR validity and quality edits; write the Fair Lending CRA and Special-Purpose Programs option that extract can carry.

Decision

Fair-lending officer 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 HMDA LAR validity and quality edits after a CRA PE that called the assessment area too narrow.

Hypotheses to test

• HMDA LAR validity and quality edits reads as Remove access or reverse the item once a CRA PE that called the assessment area too narrow is lined up to the same Fair Lending population.
• HMDA LAR validity and quality edits is closer to Temporary compensating control after a CRA PE that called the assessment area too narrow; Remove access or reverse the item would over-claim this CRA and Special-Purpose Programs extract.
• Approve a documented exception is still live in HMDA LAR validity and quality edits for fair-lending officer in a bank with thin HMDA LAR quality.
• HMDA LAR validity and quality edits is missing the fact fair-lending officer needs after a CRA PE that called the assessment area too narrow; stop this Fair Lending close.

Analysis required

• Match the adverse-action language to the facts in HMDA LAR validity and quality edits.
• 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 a CRA PE that called the assessment area too narrow.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against a CRA PE that called the assessment area too narrow and write the one fact that would move a model update needs for fair-lending officer.

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 a CRA PE that called the assessment area too narrow). If HMDA LAR validity and quality edits cannot force a Fair Lending label under CRA and Special-Purpose Programs, stop. If HMDA LAR validity and quality edits after a CRA PE that called the assessment area too narrow cannot support Remove access or reverse the item versus Temporary compensating control on this Fair Lending CRA and Special-Purpose Programs close, fair-lending officer must do not infer a control or scheme beyond the transaction and entitlement evidence.