A bank's HMDA data shows that it approves 90% of applications in predominantly white neighborhoods but only 60% in predominantly minority neighborhoods. The bank claims this is due to different economic conditions. What is the most appropriate regulatory response?
Correct Answer
B) Conduct a detailed examination of the bank's underwriting practices and policies
Geographic disparities in lending patterns identified through HMDA data warrant detailed examination of underwriting practices. Regulators must investigate whether the disparities are justified by legitimate business factors or indicate potential redlining or other discriminatory practices.
Why This Is the Correct Answer
Geographic disparities in lending patterns identified through HMDA data warrant detailed examination of underwriting practices. Regulators must investigate whether the disparities are justified by legitimate business factors or indicate potential redlining or other discriminatory practices.
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