By Clark R. Abrahams
reasonable Lending ComplianceIntelligence and Implications for credits probability Management
"Brilliant and informative. An in-depth examine leading edge techniques to credits threat administration written through practitioners. This book will function a vital reference textual content in case you desire to make credits available to underserved shoppers. it truly is complete and obviously written."
--The Honorable Rodney E. Hood
"Abrahams and Zhang's well timed treatise is a must-read for all these attracted to the serious function of credits within the economic system. They ably discover the intersection of credits entry and credits chance, suggesting a hybrid strategy of human judgment and desktop types because the beneficial route to balanced and reasonable lending. In an atmosphere of quickly altering client demographics, in addition to regulatory reform projects, this ebook indicates new analytical types in which to supply credits to make sure compliance and to regulate firm risk."
--Frank A. Hirsch Jr., Nelson Mullins Riley & Scarborough LLP monetary prone legal professional and previous normal tips for Centura Banks, Inc.
"This publication tackles head out there mess ups that our present probability administration structures have to handle. not just do Abrahams and Zhang adeptly articulate why we will and may increase our structures, they supply the analytic facts, and the stairs towards implementations. reasonable Lending Compliance fills a much-needed hole within the box. If carried out systematically, this concept management will result in advancements in reasonable lending practices for all Americans."
--Alyssa Stewart Lee, Deputy Director, city Markets Initiative The Brookings Institution
"[Fair Lending Compliance]...provides a different combination of qualitative and quantitative information to 2 forms of monetary associations: those who simply want a little assist in staying at the correct part of complicated reasonable housing laws; and those who aspire to management in profitably and responsibly serving the unmet credits wishes of various companies and shoppers in America's rising family markets."
--Michael A. Stegman, PhD, the loo D. and Catherine T. MacArthur beginning, Duncan MacRae '09 and Rebecca Kyle MacRae Professor of Public coverage Emeritus, collage of North Carolina at Chapel Hill
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Additional resources for Fair lending compliance : intelligence and implications for credit risk management
For example, an analysis of the Boston Fed data (Han, Song, Learning and Statistical Discrimination in Lending, unpublished manuscript, 2002) found that, for the subsample with no credit history information, very large racial differences exist in underwriting outcomes, versus no racial differences for the subsample where information on credit history is available. This was termed as statistical discrimination. See also Ross, Stephen L. “What Is Known about Testing for Discrimination: Lessons Learned by Comparing across Different Markets,” University of Connecticut Working Paper 2003-21, 2002, pp.
See Glantz, Morton, Managing Bank Risk: An Introduction to Broad-Based Credit Engineering. Academic Press, 2002, pp. 375–379. 8 Abrahams c01 2 11/10/07 PREPARE FOR THE CHALLENGES 9 Second, data is multidimensional and often must be compiled at the transaction or account level, then organized via segment, assessed, aggregated and compared, trended, and finally summarized. Compliance staff struggle in their attempts to make a multitude of meaningful comparisons relative to their past performance; to other lenders operating in the same market; and across geographies, legal entities, different types of loans, and different groups of loan applicants.
Ability to achieve and maintain compliance with all applicable laws and regulations. Adequate internal control strength to ensure operational effectiveness and compliance with internal policies. Constantly strive for greater efficiency by identifying and eliminating redundant or unnecessary processes, people, and systems to ensure a streamlined organization. Mold a culture that is customer focused and results oriented, with individual accountability at all levels of the firm. To ensure that these concerns are met, a financial institution’s primary regulator will periodically conduct various exams to perform an independent verification.