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

Posted: 23 Apr 2002

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

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Abstract

In this paper, we examine how statistical analysis is used to help conduct fair lending compliance examinations. We present a case study of an actual fair lending examination of a large mortgage lender, illustrating how statistical techniques are used to focus examiner efforts. Our case also highlights the limitations inherent in statistical analysis of discrimination. The study suggests that statistical analysis and the more-traditional comparative file reviews complement one another in the overall examination process, offsetting some of the limitations inherent in each.

Keywords: mortgage discrimination, fair lending, bank regulation

Suggested Citation

Calem, Paul S. and Longhofer, Stanley D., Anatomy of a Fair Lending Exam: The Uses and Limitations of Statistics. Available at SSRN: https://ssrn.com/abstract=301201

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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