Assess whether a model update needs a fair-lending revalidation (6a0e51)

Situation

An exception rate twice as high for one group after credit controls put small-business decline comparative file set in front of second-review underwriter in a lender expanding into majority-minority census tracts. This Fair Lending / CRA and Special-Purpose Programs close is a model update needs from small-business decline comparative file set, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Second-review underwriter 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 exception rate twice as high for one group after credit controls.

Hypotheses to test

• Small-business decline comparative file set reads as Remove access or reverse the item once an exception rate twice as high for one group after credit controls is lined up to the same Fair Lending population.
• Small-business decline comparative file set is closer to Temporary compensating control after an exception rate twice as high for one group after credit controls; Remove access or reverse the item would over-claim this CRA and Special-Purpose Programs extract.
• Approve a documented exception is still live in small-business decline comparative file set for second-review underwriter in a lender expanding into majority-minority census tracts.
• Small-business decline comparative file set is missing the fact second-review underwriter needs after an exception rate twice as high for one group after credit controls; stop this Fair Lending close.

Analysis required

• Flag any disparate-impact table second-review underwriter 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 CRA and Special-Purpose Programs file, read small-business decline comparative file set 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 second-review underwriter.