March 9, 2010
Congratulations on another successful HMDA and CRA submission season. From conversations we have had with all of our clients, it looks like everyone submitted on time and error free! That is great news.
Now the spotlight changes from data collection, clean-up and submission to analyzing your data, and Fair Lending Risk is the hot topic in the industry. Are you lending equally to prohibited basis groups? Are you making different decision or offering different pricing based on age, race, sex, etc… ? Do you have a way to tell if you have disparities between prohibited and non-prohibited basis borrowers? Every institution that does lending should have two things minimum in place for Fair Lending, 1) well documented and up-to-date policies and procedures, and 2) a means to track and analyze data to make sure the policies and procedures are working. The penalties for Fair Lending violations can be significant!
The good news is that RATA’s Comply Fair Lending module(s) can help. RATA offers two levels of Fair Lending Analysis to help institutions of every size and skill level. For smaller institutions with minimal volumes we offer Comply Fair Lending, which actually makes screening for statistically significant disparities easy. With Comply Fair Lending you can import all of your HMDA and additional Fair Lending data, run scorecards on all of the key government risk factors, drill down into the data and perform Comparative File Reviews on similarly situated applications with different outcomes to see if you have Fair Lending issues or if the differences are justified. Without Comply Fair Lending this task is extremely time consuming and would not be anywhere as thorough. What could take a few days in Comply, could take months to try and do manually and with unproven results.
For larger institutions or institutions with staffing that that understand statistics RATA also offers a more advanced Fair Lending module that offers more advanced tools for performing Regression Analysis and all of the tasks associated with Regression. With Comply Advanced Analysis and Regression, you get all of the Data Mining Functionality that the Comply Fair Lending offers plus, tools for normalizing your date, identifying outliers and other data that may skew results, organizing data and ultimately creating models and running Regression on your data. You can then run Comparative File Reviews on the data that had significant deviations from the predicted outcomes.
Regulators are putting more emphasis on this type of analysis and if your institution is unable to perform this type of analysis you may be putting your institution at extreme risk. Call RATA today at 407-831-7282 or email jaw@rataassociates.comand find out more information on how Comply Fair Lending and/or Comply Advanced Analysis and Regression can help you. You are only a simple order form away from peace of mind.