Whether pricing disparities are justified by legitimate factors from HMDA LAR

Situation

A DOJ or CFPB monitor request for pricing files put HMDA LAR validity and quality edits in front of model-risk partner for credit scoring in a small-business desk using a new vendor score. This Fair Lending / Pricing and Credit Limits close is pricing disparities are justified from HMDA LAR validity and quality edits, and the live options are Remove access or reverse the item, Temporary compensating control, Approve a documented exception.

Decision

Model-risk partner for credit scoring in a small-business desk using a new vendor score must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using HMDA LAR validity and quality edits after a DOJ or CFPB monitor request for pricing files.

Hypotheses to test

• Authorize Remove access or reverse the item now; HMDA LAR validity and quality edits already has the discriminator after a DOJ or CFPB monitor request for pricing files.
• Keep Temporary compensating control in force until HMDA LAR validity and quality edits is completed after a DOJ or CFPB monitor request for pricing files for model-risk partner for credit scoring.
• Treat HMDA LAR validity and quality edits as Approve a documented exception because both readings appear after a DOJ or CFPB monitor request for pricing files.
• Refuse a Fair Lending close: model-risk partner for credit scoring does not have the page pricing disparities are justified turns on in HMDA LAR validity and quality edits.

Analysis required

• Flag any disparate-impact table model-risk partner for credit scoring cannot explain from HMDA LAR validity and quality edits.
• Test a documented exception versus a pattern a small-business desk using a new vendor score must defend.
• Match the adverse-action language to the facts in HMDA LAR validity and quality edits.
• For this Fair Lending Pricing and Credit Limits file, read HMDA LAR validity and quality edits against a DOJ or CFPB monitor request for pricing files and write the one fact that would move pricing disparities are justified 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 / Pricing and Credit Limits packet (HMDA LAR validity and quality edits after a DOJ or CFPB monitor request for pricing files). The follow-on Pricing and Credit Limits action is what model-risk partner for credit scoring does next: implement the option, assign an owner, and log the missing fact.