Assess whether a model update needs a fair-lending revalidation (357093)

Situation

A manufactured-housing lender with dealer-originated files cannot treat an exception rate twice as high for one group after credit controls as color commentary on underwriting exception log by branch. Fair-lending officer must close a model update needs from that extract under Fair Lending / Redlining and HMDA Data.

Decision

Fair-lending officer in a manufactured-housing lender with dealer-originated files must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using underwriting exception log by branch after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• Underwriting exception log by branch 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.
• Underwriting exception log by branch 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 Redlining and HMDA Data extract.
• Approve a documented exception is still live in underwriting exception log by branch for fair-lending officer in a manufactured-housing lender with dealer-originated files.
• Underwriting exception log by branch is missing the fact fair-lending officer 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 fair-lending officer cannot explain from underwriting exception log by branch.
• Test a documented exception versus a pattern a manufactured-housing lender with dealer-originated files must defend.
• Match the adverse-action language to the facts in underwriting exception log by branch.
• For this Fair Lending Redlining and HMDA Data file, read underwriting exception log by branch 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 fair-lending officer.

Recommendation

Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Redlining and HMDA Data packet (underwriting exception log by branch after an exception rate twice as high for one group after credit controls). The follow-on Redlining and HMDA Data action is what fair-lending officer does next: implement the option, assign an owner, and log the missing fact.