Anatomy of a Fair-Lending Exam: The Uses and Limitations of Statistics

35 Pages Posted: 12 Jul 2000 Last revised: 18 Nov 2007

See all articles by Paul S. Calem

Paul S. Calem

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Stanley D. Longhofer

Wichita State University - W. Frank Barton School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 2000

Abstract

In this paper, we consider the role of statistical analysis in fair lending compliance examinations. We present a case study of an actual examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool focusing examiner efforts to either uncover illegal discrimination or exonerate an institution so accused. Importantly, our case also highlights the limitations of such statistical techniques. The study suggests that statistical analysis combined with comparative file review offer a balanced and thorough approach to enforcement of fair lending laws.

JEL Classification: G21, G28, J78

Suggested Citation

Calem, Paul S. and Longhofer, Stanley D., Anatomy of a Fair-Lending Exam: The Uses and Limitations of Statistics (March 2000). FEDS Working Paper No. 2000-15, FRB of Cleveland Working Paper No. 00-03R, Available at SSRN: https://ssrn.com/abstract=224823 or http://dx.doi.org/10.2139/ssrn.224823

Paul S. Calem (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Stanley D. Longhofer

Wichita State University - W. Frank Barton School of Business ( email )

1845 N. Fairmount
Wichita, KS 67260
United States
316-978-7120 (Phone)
316-978-3263 (Fax)

HOME PAGE: http://webs.wichita.edu/longhofer

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