Assess whether a model update needs a fair-lending revalidation (1c8da6)

Situation

Model-risk partner for credit scoring in a lender expanding into majority-minority census tracts has one working extract — small-business decline comparative file set — after a branch that stopped taking applications in one ZIP. If small-business decline comparative file set cannot support a model update needs, the honest Fair Lending output is hold.

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 a branch that stopped taking applications in one ZIP.

Hypotheses to test

• Authorize Remove access or reverse the item now; small-business decline comparative file set already has the discriminator after a branch that stopped taking applications in one ZIP.
• Keep Temporary compensating control in force until small-business decline comparative file set is completed after a branch that stopped taking applications in one ZIP for model-risk partner for credit scoring.
• Treat small-business decline comparative file set as Approve a documented exception because both readings appear after a branch that stopped taking applications in one ZIP.
• Refuse a Fair Lending close: model-risk partner for credit scoring does not have the page a model update needs turns on in small-business decline comparative file set.

Analysis required

• Compare small-business decline comparative file set to similarly situated files, second-review notes, and reason codes after a branch that stopped taking applications in one ZIP.
• 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.
• For this Fair Lending Examination and Notices file, read small-business decline comparative file set against a branch that stopped taking applications in one ZIP 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 a branch that stopped taking applications in one ZIP). 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.