Assess whether a model update needs a fair-lending revalidation (c61483)

Situation

Small-business decline comparative file set arrived with an underwriter chat that used coded language for model-risk partner for credit scoring. That is a Fair Lending Examination and Notices decision on a model update needs in a lender expanding into majority-minority census tracts.

Decision

Model-risk partner for credit scoring 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 small-business decline comparative file set after an underwriter chat that used coded language.

Hypotheses to test

• Small-business decline comparative file set reads as Remove access or reverse the item once an underwriter chat that used coded language is lined up to the same Fair Lending population.
• Small-business decline comparative file set is closer to Temporary compensating control after an underwriter chat that used coded language; Remove access or reverse the item would over-claim this Examination and Notices extract.
• Approve a documented exception is still live in small-business decline comparative file set for model-risk partner for credit scoring in a lender expanding into majority-minority census tracts.
• Small-business decline comparative file set is missing the fact model-risk partner for credit scoring needs after an underwriter chat that used coded language; stop this Fair Lending close.

Analysis required

• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from small-business decline comparative file set.
• 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 small-business decline comparative file set.
• For this Fair Lending Examination and Notices file, read small-business decline comparative file set against an underwriter chat that used coded language and write the one fact that would move a model update needs for model-risk partner for credit scoring.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (small-business decline comparative file set after an underwriter chat that used coded language). The follow-on Examination and Notices action is what model-risk partner for credit scoring does next: implement the option, assign an owner, and log the missing fact.