Adverse-action notice operations lead must resolve whether a redlining

Situation

CRA assessment-area versus lending footprint arrived with a DOJ or CFPB monitor request for pricing files for adverse-action notice operations lead. That is a Fair Lending Pricing and Credit Limits decision on a redlining pattern exists in a credit union rolling out a special-purpose credit program.

Decision

Adverse-action notice operations lead in a credit union rolling out a special-purpose credit program must choose Remove access or reverse the item / Temporary compensating control / Approve a documented exception / Hold using CRA assessment-area versus lending footprint after a DOJ or CFPB monitor request for pricing files.

Hypotheses to test

• A DOJ or CFPB monitor request for pricing files is noise around an already-controlled Pricing and Credit Limits process in a credit union rolling out a special-purpose credit program, given CRA assessment-area versus lending footprint.
• A DOJ or CFPB monitor request for pricing files is the event in CRA assessment-area versus lending footprint that forces Remove access or reverse the item for adverse-action notice operations lead under Fair Lending.
• CRA assessment-area versus lending footprint shows a one-file miss after a DOJ or CFPB monitor request for pricing files, not a Pricing and Credit Limits program failure.
• CRA assessment-area versus lending footprint cannot decide a redlining pattern exists yet after a DOJ or CFPB monitor request for pricing files; hold is the only Fair Lending close a credit union rolling out a special-purpose credit program can defend.

Analysis required

• Check HMDA coding and underwriting policy against a redlining pattern exists.
• Compare CRA assessment-area versus lending footprint to similarly situated files, second-review notes, and reason codes after a DOJ or CFPB monitor request for pricing files.
• Flag any disparate-impact table adverse-action notice operations lead cannot explain from CRA assessment-area versus lending footprint.
• For this Fair Lending Pricing and Credit Limits file, read CRA assessment-area versus lending footprint against a DOJ or CFPB monitor request for pricing files and write the one fact that would move a redlining pattern exists for adverse-action notice operations lead.

Recommendation