Assess whether a redlining pattern exists after controls (eb9377)

Situation

In a lender expanding into majority-minority census tracts, HMDA LAR validity and quality edits is the evidence after an exception rate twice as high for one group after credit controls. Second-review underwriter has to pick Remove access or reverse the item or Temporary compensating control for this Fair Lending CRA and Special-Purpose Programs close using HMDA LAR validity and quality edits.

Decision

Second-review underwriter 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 HMDA LAR validity and quality edits after an exception rate twice as high for one group after credit controls.

Hypotheses to test

• An exception rate twice as high for one group after credit controls is noise around an already-controlled CRA and Special-Purpose Programs process in a lender expanding into majority-minority census tracts, given HMDA LAR validity and quality edits.
• An exception rate twice as high for one group after credit controls is the event in HMDA LAR validity and quality edits that forces Remove access or reverse the item for second-review underwriter under Fair Lending.
• HMDA LAR validity and quality edits shows a one-file miss after an exception rate twice as high for one group after credit controls, not a CRA and Special-Purpose Programs program failure.
• HMDA LAR validity and quality edits cannot decide a redlining pattern exists yet after an exception rate twice as high for one group after credit controls; hold is the only Fair Lending close a lender expanding into majority-minority census tracts can defend.

Analysis required

• Match the adverse-action language to the facts in HMDA LAR validity and quality edits.
• Check HMDA coding and underwriting policy against a redlining pattern exists.
• Compare HMDA LAR validity and quality edits to similarly situated files, second-review notes, and reason codes after an exception rate twice as high for one group after credit controls.
• For this Fair Lending CRA and Special-Purpose Programs file, read HMDA LAR validity and quality edits against an exception rate twice as high for one group after credit controls and write the one fact that would move a redlining pattern exists for second-review underwriter.