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#1992658 - 01/30/15 09:41 PM Fair Lending Analysis
Anonymous
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When performing your HMDA fair lending analysis, how do you identify your peers? Is it similarly situated institutions – asset size, similar footprint, similar products, etc. or do you compare the institutions performance against all institutions regardless of size or capacity?

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#1992699 - 01/30/15 11:26 PM Re: Fair Lending Analysis Anonymous
Rocky P Online
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Joined: Jun 2003
Posts: 7,650
Florida
One way is to look at actions in your assessment area from regulated banks.

Depending on the type of regulatory concerns, any of the groups of peers can be used. The above looks at your area (similar customer base) and banks/credit unions (similar types of loan products).

One case I'm aware of, a small west coast bank had peers of all sizes and locations all over the US. The regulators were comparing similar footprint demographics (race and ethnicity).
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#1992711 - 01/31/15 11:28 AM Re: Fair Lending Analysis Anonymous
Tennismom Offline
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Tennismom
Joined: Jan 2004
Posts: 778
Our examiners want to compare the bank's lending with those of the much larger national banks, the Wells Fargo and Bank of America. Larger institutions have special lending programs and products that a smaller institutions cannot offer therefore disparities exist. Am I missing something here?

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#1992715 - 01/31/15 03:40 PM Re: Fair Lending Analysis Anonymous
Rocky P Online
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Joined: Jun 2003
Posts: 7,650
Florida
No, examiners are not perfect, and just as underwriters can see loans differently and factor the components differently, so do examiners.

There is no right solution for all cases, nor instructions on which is the best way. I generally look at the actions taken to see if the percentage is similar to the other banks in the assessment area and the penetration (comparison) of application and loan percentages based on race and ethnicity to see if they are similar to bank lenders in the assessment area. Larger banks can get more sophisticated but in most cases, decisions of similar percentages and applications and loans from similar race ethnicity percentages are good indicators.
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#1992716 - 01/31/15 03:58 PM Re: Fair Lending Analysis Anonymous
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
I agree with Rocky. A bank should look at what other banks of any size are doing in the same area. If a bank is not making loans in a particular area but other banks are, determine what the difference? Perhaps the answer is a special loan program offered by the larger bank, but that is valuable information and certainly is good to know if a fair lending exam to explain your bank's performance.
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Kathleen O. Blanchard, CRCM "Kaybee"
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