Assess whether a model update needs a fair-lending revalidation from HMDA LAR

Situation

A vendor score change with no disparate-impact test put HMDA LAR validity and quality edits in front of adverse-action notice operations lead in a credit union rolling out a special-purpose credit program. This Fair Lending / Pricing and Credit Limits close is a model update needs from HMDA LAR validity and quality edits, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Adverse-action notice operations lead 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 HMDA LAR validity and quality edits after a vendor score change with no disparate-impact test.

Hypotheses to test

• Adverse-action notice operations lead can defend Remove access or reverse the item from HMDA LAR validity and quality edits after a vendor score change with no disparate-impact test in a Fair Lending challenge.
• Adverse-action notice operations lead 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 vendor score change with no disparate-impact test.
• A vendor score change with no disparate-impact test 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 vendor score change with no disparate-impact test conflict for adverse-action notice operations lead; hold this Pricing and Credit Limits file.

Analysis required

• Flag any disparate-impact table adverse-action notice operations lead cannot explain from HMDA LAR validity and quality edits.
• 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 HMDA LAR validity and quality edits.
• For this Fair Lending Pricing and Credit Limits file, read HMDA LAR validity and quality edits against a vendor score change with no disparate-impact test and write the one fact that would move a model update needs for adverse-action notice operations lead.

Recommendation