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#1880275 - 12/19/13 05:34 PM Matched Pair Analysis
rca Offline
New Poster
Joined: Nov 2013
Posts: 15
I was hoping that I could get some input about how a matched pair analysis for pricing worksheet should look like. thanks.

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Fair Lending
#1880330 - 12/19/13 07:06 PM Re: Matched Pair Analysis rca
Squeakers Offline
Junior Member
Joined: Jul 2013
Posts: 41
Texas
I would be interested as well.
Thanks.

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#1880334 - 12/19/13 07:17 PM Re: Matched Pair Analysis rca
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,445
Galveston, TX
It would be based on your specific underwriting and pricing criteria.
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#1880354 - 12/19/13 08:12 PM Re: Matched Pair Analysis rca
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,820
Florida
It would be based on your individual circumstances, but some general rules - identify borrowers with identical loan types that locked on the same day (or a range of days when the pricing has been stable). Group into protected vs. non-protected classes. Compare APR's to see if protected classes had higher APR than non-protected.

If there was a difference, identify if it was caused by different LTV, DTI, Credit score/risk that was in the pricing guidelines.
If PC borrower had a higher APR for same product/same date, not explained by underwriting differences (in policy), it could be a matched pair.

Example 30 year fixed rate, 2 loans locked when base was at 4.40%. Similar applications - male borrower had 4.75 APR, female borrower had 4.90 APR. It could be an issue if not supported by documented differences in UW issues.
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#1880715 - 12/20/13 07:14 PM Re: Matched Pair Analysis rca
rca Offline
New Poster
Joined: Nov 2013
Posts: 15
I already have the list of matched pairs, but I'm trying to put together a worksheet to to analyze and compare the matches to the original and wasnt sure if maybe somebody had something like this.

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#1880729 - 12/20/13 07:44 PM Re: Matched Pair Analysis rca
Soccerdad Offline
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Soccerdad
Joined: May 2004
Posts: 80
IL: Will
Set this up in excel: Loan Type Occupancy Loan Amt Sex Income LTV DTI Date Rate Set Note Rate APR FICO Then compare them and explain away differences if you can.

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#1880734 - 12/20/13 07:48 PM Re: Matched Pair Analysis rca
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 85,445
Galveston, TX
I already have the list of matched pairs

I guess I am confused. If you haven't analyzed them, how do you have matched pairs??
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1881022 - 12/23/13 06:39 PM Re: Matched Pair Analysis rca
rca Offline
New Poster
Joined: Nov 2013
Posts: 15
Thanks Soccer Dad.

I haven't analyzed the matched pairs to compare them to the original outliers yet.

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#1881135 - 12/23/13 10:34 PM Re: Matched Pair Analysis rca
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,820
Florida
I'm confused now. I've been through 25+ fair lending exams and never heard an examiner explain it that way. In marched pair testing, regulators look for differences in treatment or rates between protected classes and non-protected classes, and determine if the differences are based on risks or prejudices.

Outlyers usually are unique because of a special twist - two I've seen personal loan (marginal credit) to one of the owners of the bank's most profitable clients: and the sister of the CEO. With outlayers there is usually no credit related rhyme or reason why the loan was made.
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Integrity. With it, nothing else matters. Without it, nothing else matters.

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