IMHO, length of residence in town went out in the early 1980's. That was before credit scores became the norm and reflected a stability not to skip, not any indication of repayment. (As far as I'm concerned, the only time length of residence would come into play is in the square footage of a home.)
The issue comes up that if a concession (or exception) is done for one, then it would be discrimination if not done for all that might apply. And that is across all loan officers, as the loan is being made by the bank, not the person making each decision. If you were to identify an applicant with a similar credit score that was denied, and look at their residence history (and make it clear that an examiner can say that in the same town would also apply) and they've been living there for a similar amount of time, IMHO, they have been discriminated against.
Exceptions should be quantifiable, recorded, analyzed and reported. Long time customer means nothing. An account relationship for example, can be a $2,000 unused credit card - which proves nothing, to a relationship that the person had a similar amount of credit that was paid as agreed.
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Integrity. With it, nothing else matters. Without it, nothing else matters.