Finding a fair lending compliance tool to make it easier for you to efficiently and effectively monitor your lending data is a challenge. Knowing exactly what to ask the vendor can ease the selection process.

Below are twelve suggested questions to ask:

  1. How long has the company been doing business in the fair lending industry?

You’ll want to know that the software is built upon years of industry knowledge and not just a post-Dodd-Frank venture.  Is this a company that has 1 year of experience in the industry or many?

2.  Is the vendor’s software web-based?

For many companies, it adds stress on the existing IT department when new applications are added to the company’s toolbox.  A web-based solution should be relatively easy to launch with very little, to no, additional IT resources needed to deploy and support the solution.

3.  Will updates and maintenance interrupt user access to the tool?

It is extremely important that updates to web-based tools be done during non-business hours or on the weekend so your work is not interrupted.  Be sure to get an assurance that this is the case.

4.  Are the output reports in a format that allows users to create custom reports?

Ask the vendor how you can utilize the reports generated in the fair lending software tool.   You want to be able to export, copy or save the reports in formats that you are familiar with using, for example, to be able to copy a data table, create your own charts and spreadsheets, and prepare your own written analysis to deliver to senior management.

5. Does the software offer a tool that prepares HMDA data?

The vendor should demonstrate these capabilities so you have confidence that you are investing in a tool that will make your job easier by helping you prepare and submit the new HMDA format.  Be sure that the tool you evaluate is ready for HMDA 2018 submissions, including data validation tools that allow you to troubleshoot applications that are causing edit checks to fail.

6. Does the vendor have a live online support team?

How does the company address questions from users?  Will you have a dedicated support person or team that is available during business hours to address questions, and what is the typical wait time for a response?

7. How does the vendor train new customers, and how often does refresher training occur?

Find out from the vendor how they deploy ongoing training.  Will you have to pay for additional training, and what happens when your staff changes?  The vendor should provide new user training and be invested in helping their user community get the most out of the tool. Regular refresher training can remind you of how to use different aspects of the tool and keep you up-to-date on new features.

8. Does the tool analyze pre-2018 HMDA, 2018 HMDA, and HMDA Plus data?

Lenders engaged in mortgage lending need to find out if the tool analyzes pre-2018 HMDA data only, or does it account for the 2018 HMDA data?  Beyond that, you’ll want to find out what additional data fields the tool will help you analyze that are not captured in HMDA.  For example, can you track pricing adjustments, exception reasons, or other information that can help you when it comes time to compare different outcomes for two similarly situated applicants?

9. Can I use the tool to perform regression and statistical analysis as well as matched pair analysis?

A lot is being written about doing a statistical analysis for fair lending.  You will want to ask vendors if their tools include a statistics module for fair lending and assess the vendor’s educational training related to statistics and fair lending so that you can conduct the analysis with confidence. If you’re really in a jam, established vendors will be able to offer consulting engagements that will take you through the analysis, and more importantly, document for you a detailed process to follow on a go-forward basis.

10.  Do regulators use the tool?

Find out from the vendor if their tools are used by state and/or federal regulators.  This ability to see how you are perceived by your regulator is a value-add when that regulator is also using the tool. 

11. Can I analyze non-mortgage data in the tool such as auto, consumer or business lending?

Ask the vendor if their tool can handle data for different types of lending activity.  Verify whether the tool is all-inclusive and will allow you to analyze all activity in your portfolio; alternatively, non-mortgage data types may be considered add-ons that come with an additional cost. Ask about proxy methodologies for race and gender in the software.

12.  What type of mapping capability does the tool use?

Ask the vendor how the tool displays lending activity on a map.  Will you have to purchase additional mapping software, or does the tool contain mapping capabilities?  Ask for a demonstration to see how simple it is to produce maps in the software.