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


In this paper, we consider the role of statistical analysis in fair-lending compliance examinations. We present a case study of an actual fair-lending examination of a large mortgage lender, demonstrating how statistical techniques can be a valuable tool in 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 when combined with comparative file review offers a reasonably balanced and thorough approach to the enforcement of fair-lending laws.


JEL Subject Codes: G21, G28, J78

Suggested citation: Calem, Paul S., and Stanley D. Longhofer, 2000. “Anatomy of a Fair-Lending Exam: The Uses and Limitations of Statistics,” Federal Reserve Bank of Cleveland, Working Paper, no. 00-03R.

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