ComplianceTech Announces Enhancements to Race/Ethnicity Estimation Software to Create Surrogates for Fair Lending Analysis

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ComplianceTech announced enhancements to the Racestimator™, a software product developed over 10 years ago that estimates race and ethnicity using surnames, census demographics and regression modeling. The Racestimator™ allows companies to create surrogates to analyze data sets and business trends when race or ethnicity is not supplied or collected.

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“We have created a new user interface that makes the process a snap for us. In most instances we can turn a job around in an hour or two if the addresses and names are in good condition,” says Michael Taliefero, Managing Director of ComplianceTech.

ComplianceTech announced today enhancements to its Racestimator™ software, a product that allows businesses to estimate race and ethnicity of customers using a sophisticated combination of surnames, first names, U.S. Census Bureau Data and regression models. Race estimation is the process by which a race or ethnicity is ascribed to applicants when the race/ethnicity of the customer is not known. The tool is useful to prepare auto, consumer, student and credit card loan data with race or ethnicity surrogates for fair lending analysis or mortgage loans when those data have not been collected pursuant to the current Home Mortgage Disclosure Act (HMDA). The process was extensively used by plaintiffs in the numerous class action auto fair lending cases a few years ago. The process was also used by the National Security Agency (NSA) to ensure fair hiring and recruitment. Banks are currently using the service to race code consumer and auto loans.

A new enhancement to the Racestimator™ process is the 24 hour turnaround service and expanded coverage. “We have created a new user interface that makes the process a snap for us. In most instances we can turn a job around in an hour or two if the addresses and names are in good condition,” says Michael Taliefero, Managing Director of ComplianceTech. “Also, we have added a world-wide names database and a multi-pass process at different levels of census geographies to improve coverage,” says Taliefero.

The Racestimator™ can help companies fill in the gap that many data sets have with regard to missing applicant race and ethnicity. Often these data are not collected by businesses but can prove valuable in marketing and outreach activities to specific populations. ComplianceTech was the first company to ever create a race/ethnicity estimation tool for the lending industry. Competing products simply use the Hispanic list provided by the census bureau. The Racestimator™ goes far beyond this and can code Asians (with various subtypes if necessary) and African-Americans. Gender coding is thrown in for no additional charge.

ComplianceTech has been using the Racestimator™ for over 10 years in the mortgage lending industry, specifically in analyzing lending data related to home mortgage loans. The process includes estimating race and ethnicity using a combination of surname, first name, geocoding, and regression modeling.

ComplianceTech uses a proprietary process developed and enhanced via years of research and interaction with clients and regulators, to perform its race estimation services.

There are many ways companies can incorporate race estimation and prediction into their analysis of business practices. ComplianceTech encourages companies to contact them with test data sets so they can demonstrate the reliability of the estimates. The Racestimator™ is currently available for licensing as a custom solution or companies can outsource to ComplianceTech for this valuable service.

ComplianceTech, based in Arlington, VA, provides specialized lending intelligence services and innovative software solutions to lending institutions, community organizations and government agencies. The company’s software products include LendingPatterns™, Fair Lending Magic™, Shamus®: The Fair Lending Risk Manager, the Racestimator™, The Premium Pricing Analyzer™, and LMI and Minority Zip Code Opportunity Maps™.

For more information about the Racestimator™, please visit http://www.ComplianceTech.com or contact Dana Ginsburg at danaginsburg(at)compliancetech(dot)com.

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Dana Ginsburg
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