A Model Update Needs a Fair-lending Revalidation

Situation

HMDA data-quality manager owns a model update needs inside a lender expanding into majority-minority census tracts with model-reason-code mapping that does not match notices as the only packet. An exception rate twice as high for one group after credit controls is what changed the clock for this Fair Lending Pricing and Credit Limits file.

Decision

HMDA data-quality manager in a lender expanding into majority-minority census tracts must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using model-reason-code mapping that does not match notices after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• An exception rate twice as high for one group after credit controls is noise around an already-controlled Pricing and Credit Limits process in a lender expanding into majority-minority census tracts, given model-reason-code mapping that does not match notices.
• An exception rate twice as high for one group after credit controls is the event in model-reason-code mapping that does not match notices that forces Remove access or reverse the item for HMDA data-quality manager under Fair Lending.
• Model-reason-code mapping that does not match notices shows a one-file miss after an exception rate twice as high for one group after credit controls, not a Pricing and Credit Limits program failure.
• Model-reason-code mapping that does not match notices cannot decide a model update needs yet after an exception rate twice as high for one group after credit controls; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

Analysis required

• Test a documented exception versus a pattern a lender expanding into majority-minority census tracts must defend.
• Match the adverse-action language to the facts in model-reason-code mapping that does not match notices.
• Check HMDA coding and underwriting policy against a model update needs.
• For this Fair Lending Pricing and Credit Limits file, read model-reason-code mapping that does not match notices 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 HMDA data-quality manager.

Recommendation