Assess whether pricing disparities are justified by legitimate factors

SITUATION Examination and Notices work in an institution preparing for a redlining exam now turns on pricing disparities are justified because an exception rate twice as high for one group after credit controls put appraisal-gap outcomes in majority-minority tracts in play. Examination and Notices work in an institution preparing for a redlining exam now turns on pricing disparities are justified because an exception rate twice as high for one group after credit controls put appraisal-gap outcomes in majority-minority tracts in play; fair-lending officer should say what appraisal-gap outcomes in majority-minority tracts proves for Fair Lending.

DECISION Fair-lending officer in an institution preparing for a redlining exam must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using appraisal-gap outcomes in majority-minority tracts after an exception rate twice as high for one group after credit controls.

HYPOTHESES TO TEST 1. The population in appraisal-gap outcomes in majority-minority tracts is the one an exception rate twice as high for one group after credit controls named, so Remove access or reverse the item follows for this Examination and Notices file. 2. The population in appraisal-gap outcomes in majority-minority tracts is adjacent only to an exception rate twice as high for one group after credit controls; Temporary compensating control is the honest Fair Lending call. 3. An institution preparing for a redlining exam already contained an exception rate twice as high for one group after credit controls before appraisal-gap outcomes in majority-minority tracts arrived; no new Examination and Notices path. 4. Provenance on appraisal-gap outcomes in majority-minority tracts after an exception rate twice as high for one group after credit controls is broken; do not pick Remove access or reverse the item or Temporary compensating control yet.

ANALYSIS REQUIRED 1. Compare appraisal-gap outcomes in majority-minority tracts to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls. 2. Flag any disparate-impact table fair-lending officer cannot explain from appraisal-gap outcomes in majority-minority tracts. 3. Test a documented exception versus a pattern an institution preparing for a redlining exam must defend. 4. For this Fair Lending Examination and Notices file, read appraisal-gap outcomes in majority-minority tracts against an exception rate twice as high for one group after credit controls and write the one fact that would move pricing disparities are justified for fair-lending officer.

RECOMMENDATION Choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold on this Fair Lending / Examination and Notices packet (appraisal-gap outcomes in majority-minority tracts after an exception rate twice as high for one group after credit controls). The follow-on Examination and Notices action is what fair-lending officer does next: implement the option, assign an owner, and log the missing fact.