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Representative Engagements

CRA Parity Analysis

We assisted the bank in developing a Community Reinvestment Act (CRA) parity analysis to identify gaps in mortgage, small business, and small farm lending performance. Parity was established using owner occupied properties for mortgage and the distribution of businesses and farms for small business and small farm lending performance comparison. Distribution analysis identified deficiencies in the bank’s assessment area and at the branch level. The information provided the institution an opportunity to proactively address its HMDA and CRA lending performance.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

CRA Parity Analysis


CRA Performance Review

We prepared a Community Reinvestment Act (CRA) performance evaluation for the bank in anticipation of its upcoming CRA examination. The performance evaluation is based on the regulatory CRA examination procedures and describes the bank’s efforts to meet the needs of the communities it serves. The engagement addressed the bank’s performance under the lending test, service test, investment test, and related community outreach efforts. Performance analytics incorporate performance context including demographics, peer performance, and other socioeconomic data.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

CRA Performance Review


Credit Needs Assessment – MSA

Lenders need to understand the credit needs in the market areas they serve in order to design and provide products and services commensurate with those needs. We conducted a mortgage credit needs assessment of a selected MSA to identify product and service opportunities in majority-minority neighborhoods. The review included demographic, socioeconomic, and housing statistics, as well as historic trends in HMDA lending. Interviews of various community organizations provided additional information on current and planned housing initiatives. The outcome of the credit needs assessment helped the bank identify housing needs, obstacles, and opportunities to enhance its fair lending performance.

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Credit Needs Assessment


Fair Lending Advisory

We provided fair lending advisory services to a national lender on development of statistical models designed to assess fair lending risk associated with marketing, underwriting, pricing, and loss mitigation. Assistance included the review of analytical results to assess and identify potential risk of disparate treatment, disparate impact and redlining. One of our fair lending practice experts participated in client meetings to review model data requirements, analytical approach, methodology for identifying fair lending risks, and review of results.  Our advice and guidance resulted in the modification of existing models and development of new models to enhance fair lending risk management efforts, as well as internal business justification of specific business practices.

Client Type

Consumer Finance

Large Bank ($50+ billion  in assets)

 

Service Type

Advisory


Fair Lending and UDAAP Audit Program Development

One of the pillars of an effective fair lending compliance management system (FL CMS) is the independent review or audit of the fair lending and responsible lending program. We assisted the company’s internal audit function in developing audit programs to assess the effectiveness of fair lending and Unfair, Deceptive or Abuses Acts or Practices (UDAAP) risk management efforts. The audit program addressed both loan origination and servicing processes and was based on the Consumer Financial Protection Bureau’s examination procedures and industry best practices. We conducted management interviews to ensure a clear understanding of the products and services in order to tailor the audit program to the company’s activities. These interviews provided the ancillary benefit of added fair lending awareness for the management team and the internal audit function. The mortgage company received a customized audit program designed to address fair lending and UDAAP risks associated with their business model.

Client Type

Mortgage Company

Service Type

Program Review / Audit


Fair Lending Examination Assistance

Subsequent to a regulatory examination, we were engaged in an advisory role and in partnership with the bank’s legal counsel. Assistance included responses to examination requests for additional information, independent review of redlining risk and preparation for potential referral to the Department of Justice.

Client Type

Regional Bank ($10 – $50 billion in assets)

 

Service Type

Advisory


Fair Lending Performance Review

We performed an analysis of the bank’s HMDA lending activity to identify 1) differences in levels of assistance based on the timing of decisions and final disposition of applications; 2) disparities in application outcomes including origination, denial, and non-decisioned applications; 3) pricing variances related to the frequency and magnitude of differences in APR and rate spread; 4)  steering of applicants to particular products or sales channels; and 5) redlining analysis to identify potential geographic and demographic gaps in higher minority geographies. The analyses provided the bank the information necessary to effectively manage fair lending performance risk.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

Performance Analysis


Fair Lending Program Audit

We were engaged to perform an audit of the bank’s fair lending compliance management system (FL CMS) in coordination with the internal audit department. The objective of the engagement was for CrossCheck to provide deeper expertise to the audit team. The scope of the audit included program governance, roles and responsibilities, policies, monitoring, and analytics. Line of business interviews helped to identify risks associated with marketing, access to credit, credit risk management, and loan pricing. The audit team now has a better understanding of fair lending risks and controls and management has received valuable feedback to help improve its fair lending CMS.

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Program Review / Audit


HMDA Data Integrity

We have assisted numerous mortgage companies in validating the accuracy of Home Mortgage Disclosure Act (HMDA) data previously submitted or in preparation for an upcoming submission. Our approach to HMDA data errors and omissions testing integrates systemic data routines to identify conflicts between loan origination systems (LOS) and HMDA data. Identifying statistical anomalies or “red flags” when compared to peers and/or national aggregate data is a first step that helps focus the review. Through this approach we are able to ascertain the root cause of identified data issues, provide the framework for enhancing system controls, and enabling automated corrections to the LAR resulting in improved data integrity today and for future submissions.

Client Type

Mortgage Company

Service Type

HMDA Data Integrity