It’s common knowledge that the part of an iceberg that can be seen above the surface is just a small portion of the whole iceberg. In fact, about 90 percent of the iceberg is hidden below the water’s surface. If you are trusting your fair lending risk to just the data visible on the surface, there is a lot that you’ll miss. In our last post, we described how a regression analysis can be used to see more of your data that is hidden below the surface. If your regression analysis suggests any areas of concern, it may be time to do a deeper dive and get a view of the whole iceberg to see if those concerns do indeed have a legitimate explanation. The best way to do that is with a comparative file review.
The point of conducting a fair lending regression analysis is to determine whether or not there is an issue that goes beyond the regression. Remember, while a regression analysis isolates certain variables (such as product type or loan amount), it is still, for the most part, a view of the surface. A comparative file review, on the other hand, dives in to focus on specific loan pairs.
Read the full article at