Forms of Fair Lending Discrimination: Introduction
In an upcoming series of posts we address types of fair lending discrimination that are commonly recognized by the regulatory and enforcement agencies.
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21Mar2017
16Mar2017
Issues in Regression Modeling For Fair Lending Underwriting Analysis (Part 2 of 2)
In our previous post, we addressed a few frequently encountered issues when using regression methods to conduct a fair lending analysis.
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14Mar2017
Issues in Regression Modeling For Fair Lending Underwriting Analysis (Part 1 of 2)
Evaluating loan application outcomes (approval or denial) in the context of fair lending is referred to as an “underwriting analysis.” Regression modeling is commonly employed in such analyses.
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09Mar2017
Recent FDIC Supervisory Report Indicates Strong Commercial Bank Loan Growth and Increasing Concentrations
The FDIC recent released its Winter 2016 edition of Supervisory Insights. This edition was focused on credit risk trends.
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07Mar2017
What Does “Statistical Significance” Mean Anyway? Part 2 of 2
In our previous post, we started introducing the concept of statistical significance. We began with making two important points. First, statistical methods are applied in order to estimate or measure an unknown. A sample of data is analyzed which is then used to draw conclusions about a larger population. This is known as statistical inference. […]
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02Mar2017
FDIC-Insured Institutions Earn $43.7 Billion in Fourth Quarter 2016, Community Bank Net Income Rises to $5.3 Billion
FDIC Chairman Gruenberg:“Revenue and net income were higher, loan balances grew, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” Gruenberg said. “Community banks also reported solid results for the quarter and year with strong net income, revenue, and loan growth.
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28Feb2017
What Does “Statistical Significance” Mean Anyway? Part 1 of 2
When statistical methods are applied to evaluate fair lending compliance, one of the metrics of interest is the statistical significance of measured differences in treatment of applicants. Such differences may be measured by such things as the interest rates charged on loans or the rates of denial for one group versus another (such as males […]
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23Feb2017
Underwriting Analysis for Fair Lending Using Logistic Regression: Odds Ratio vs. Marginal Effects
When conducting fair lending regression analysis of underwriting, we are examining a sample of loan applications that were either approved or denied. The practice is to regress denial (y=1 if denied, 0=approved) on a target group indicator variable and other attributes upon which the loan decision should have been based.
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21Feb2017
To Be Successful in Fair Lending, Lenders Must Discriminate
Several years ago, I began a conference presentation by making the statement: “To be successful at fair lending, you must learn how to properly discriminate.” The statement was obviously meant to be provocative, and it must have worked because it was quite some time before I was invited back (just kidding). The statement, however, is […]
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16Feb2017
Manage Customer Service Perceptions to Lower Fair Lending Risk
In a previous post, we addressed the importance of customer service as a component of managing fair lending risk. While it is important for an institution to have efficient processes in place to facilitate the lending process, equally important is the recognition that business is relationship.
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