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Home > Regulation & Examinations > Bank Examinations > Side by Side: A Guide to Fair Lending

Side by Side: A Guide to Fair Lending

Conducting the Test
Maintaining Confidentiality & Objectivity
Following Test Instructions
Interviewing Techniques
Scheduling the Test
Documenting the Test


As previously stated, testers, without knowledge of each other or the testing hypothesis (e.g., testing for race, age or gender discrimination, etc.), separately visit an institution. Testers are not actually requesting a loan; therefore, they do not file a completed application. However, they do experience the first phase of the loan application process. During the test, it is important for the test manager to ensure that testers:

  • Maintain confidentiality & objectivity
  • Follow test instructions
  • Interview using the tester identities
  • Complete tests as scheduled
  • Carefully document the test experience

Maintaining Confidentiality & Objectivity

The testing program must be kept confidential as any breach of confidentiality could invalidate the tests. Testers should not disclose their involvement in the testing program, or discuss their test experiences with anyone other than the test program manager.

Moreover, testing should be an objective process used to investigate lending practices. Among other things, testers should:

  • Remember that testing a particular lending institution does not necessarily indicate that discrimination occurs there
  • Refrain from making leading statements that may induce lenders to make biased comments
  • Respond neutrally if a lender makes a biased statement

For example, if a loan officer asks, Why are you looking in that neighborhood? Aren't there a lot of minorities there? The tester should simply respond, I'm just trying to get the best house for my money and that neighborhood is where I found it.

If the lender makes an ambiguous statement, the tester should ask questions to get a clearer understanding of what the lender means. For example, if the lender says, You wouldn't want to buy a house in that neighborhood because your children will not be comfortable at the neighborhood school, the tester may ask questions to find out why the lender thinks the tester's children would not be comfortable at the school.

Most importantly, testers collect facts. Testers should not:

  • Make subjective judgements about the person(s) who served them
  • Offer opinions concerning their treatment
  • Make leading statements about specific protected classes

Testers do not decide if there may have been illegal discrimination or disparate treatment. The test program manager makes that determination based on factual reports submitted by control testers, protected class testers or a complaint tester, depending on the type of test.

Following Test Instructions

Testing is a controlled process. Therefore, testers should avoid deviating from the instructions given them by the test manager, as this, too, may invalidate test results. If a tester has any questions concerning a particular testing situation, the tester should contact the test manager.

In instances where a telephone call was made to an institution before a site visit, the tester should review the telephone narrative to refresh his or her memory about the information that may have been exchanged. Testers should use common sense to determine suitable testing attire; however, dressing conservatively is usually a good rule to follow. Also, testers should not wear badges or buttons that suggest personal, political or social beliefs.

Interviewing Techniques

Testers should act interested and enthusiastic about obtaining a loan. When testing for discrimination in mortgage lending, testers will usually portray themselves as first-time home buyers so it is plausible that they may not know a great deal about the mortgage lending process; however, some familarity with basic lending terms, such as provided in Appendix B, is advisable.

Testing identities are designed by the test supervisor to specifically control for a variety of discriminatory practices. Deviation from the assigned identity may invalidate the test results. Therefore, it is imperative that testers carefully follow their identity instructions.

Testers should let the loan officer solicit information from them concerning their loan needs and personal qualifications. However, if by the end of the site visit, a loan officer has not been informative, a tester may ask, for example:

  • Do you think I will qualify for the loan?
  • What type of loan do you recommend based on my qualifications?
  • How long is the application process?
  • What else do I need to provide you with before submitting my application?

Scheduling the Test

Typically, paired tests should be completed on the same day, preferably within a few hours of each other. However, as previously mentioned, the financial institution's size and loan volume will ultimately determine when tests are scheduled. For example, if a financial institution makes only a few loans per month, test scheduling should be flexible enough to permit an acceptable comparison without raising suspicion.

Documenting the Test

It is natural for persons seeking a loan to take notes during a conversation with a loan officer or other institution personnel. Often, the information given to potential loan applicants is substantial and requires note-taking. However, testers should be careful. The lender may become uncomfortable or suspicious if the tester appears to be writing every word the lender says. Testers should collect materials such as the loan officer's business card or loan information pamphlets. Any written notes and materials should accompany the completed test report sent to the test manager.

Testers should make objective observations of their surroundings during a site visit. Everything from desk nameplates to equal opportunity or fair housing signs posted on walls should be noted and recorded on the report forms at the conclusion of the test.

Furthermore, testers should complete the test as scheduled and contact the test manager if any problems occur. Report forms should be completed immediately after each test while facts are still fresh in the tester's memory. Testers also should promptly deliver their test reports and materials obtained during the site visit to the test manager.

Last Updated 07/28/1999

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