Assess whether a model update needs a fair-lending revalidation (b1b29a)

Situation

HMDA LAR validity and quality edits arrived with a SPCP that originated almost no loans to the intended class for CRA strategist. That is a Fair Lending CRA and Special-Purpose Programs decision on a model update needs in a mortgage company after a pricing-regression spike.

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 a SPCP that originated almost no loans to the intended class.

Hypotheses to test

• CRA strategist can defend Remove access or reverse the item from HMDA LAR validity and quality edits after a SPCP that originated almost no loans to the intended class in a Fair Lending challenge.
• CRA strategist cannot defend Remove access or reverse the item from HMDA LAR validity and quality edits; Temporary compensating control is what the extract actually supports after a SPCP that originated almost no loans to the intended class.
• A SPCP that originated almost no loans to the intended class never reached the population in HMDA LAR validity and quality edits — reopen intake, do not close a model update needs.
• Two facts in HMDA LAR validity and quality edits after a SPCP that originated almost no loans to the intended class conflict for CRA strategist; hold this CRA and Special-Purpose Programs file.

Analysis required

• Test a documented exception versus a pattern a mortgage company after a pricing-regression spike must defend.
• 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.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against a SPCP that originated almost no loans to the intended class 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 a SPCP that originated almost no loans to the intended class). 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.