The report explained here is an Underwriting Disparity report. This is one of the ComplianceQC Fair Lending module's reports, and is designed to explain whether a protected class (such as a racial minority or a particular gender) receives inexplicably different treatment from other borrowers. To see the entire report in PDF form, click here.
This page will break the report into three segments. The first segment is the header, which looks like this:
The header contains several important pieces of information. First, it has the period of loans with which it deals. This is essential to developing a set of reports that follow trends over time. Second, it says that the classes in this report are organized by Race. The Fair Lending module will allow you to classify by race, gender, or age, and produce separate reports for each. Below the class variable the header indicates that all minorities in this case are being compared to white borrowers. Finally, the header explains that the disparities are explained by loan product. If you wish, you can also group units by loan officer, branch or a host of other details. This report is designed to determine whether the origination process for certain products produce disparities.
Just below the header is a table of data. The left half of the table is the second segment of the report. An example is shown here:
 |
The loan products in question are identified along the left column by number. Notice that the data are organized according to "Traditional Disparities" and "Reverse Disparities." A traditional disparity is one where the protected class is treated worse than others. A reverse disparity is the opposite. In this case, two loan products exhibit traditional disparities, and 1 exhibits a reverse disparity. the right-most columns in this segment of the report detail the approval rates for both protected (minority) and unprotected (white) borrowers. |
The third segment of the report appears directly to the right of the second. It looks like this:
| The data in the columns on the left hand side of this segment explains the "Approval Rate" column from segment two in raw numerical terms. The number of approvals and denials are listed so that you can develop a feel for how large the samples involved are. The right-most column in this segment is perhaps the most important. The "Chi-Square Probability" is the probability that the disparity between the protected and the unprotected class is due to chance. The lower the Chi-Square Probability, the greater the risk that some corrective action needs to be taken. |  |
|
|