Home Mortgage Disclosure Act (HMDA)

What Is the Home Mortgage Disclosure Act (HMDA)?

The Home Mortgage Disclosure Act (HMDA) is a federal law approved in 1975 that requires mortgage lenders to keep records of key snippets of data in regards to their lending practices, which they must submit to regulatory specialists. It was executed by the Federal Reserve through Regulation C. In 2011, the rule-composing authority of Regulation C was moved to the Consumer Financial Protection Bureau (CFPB).

Home Mortgage Disclosure Act Explained

The Home Mortgage Disclosure Act and Regulation C incorporate requirements for regulatory entries and public disclosures. The whole Home Mortgage Disclosure Act can be found in Title 12, Chapter 29 of the United States Code. Regulation C is likewise an important part of the Act. Regulation C was made by the Federal Reserve to overlay the requirements of the Act and assign certain extra requirements that banks must follow.

By and large, the primary motivations behind the Home Mortgage Disclosure Act and Regulation C are to monitor the geographic targets of mortgage lenders, giving a method for distinguishing predatory or oppressive lending practices, and to report statistics on the mortgage market to the government. The HMDA likewise helps support government-sponsored community investment drives by giving a means to dissecting the allocation of resources.

The data are utilized by government agencies, consumer gatherings, and bank examiners to decide compliance with different federal fair housing and credit laws including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act (CRA), and state laws.

In 1980, the Federal Financial Institutions Examination Council (FFIEC) was given the responsibility of facilitating public access to mortgage data from financial institutions as per the Home Mortgage Disclosure Act of 1975.

The HMDA requests that lenders recognize the sex, race, and income of those applying for or acquiring mortgages, yet the data is anonymized in record keeping.

HMDA Reporting

Under HMDA and Regulation C, certain mortgage lenders are required to keep up with records of determined mortgage lending data for the purpose of reporting. In 2019, 5,496 lenders reported 8.1 million loan beginnings — addressing 88% of the total estimated loan starts in the U.S.

In April 2020, the CFPB issued a last rule raising the data-reporting limits for gathering and reporting data about closed-end mortgage loans under the HMDA from 25 to 100 loans effective July 1, 2020.

HMDA reporting permits regulators to dissect data on mortgage loans and mortgage lending trends in a number of categories, for example, the number of pre-endorsements made, the number of mortgages conceded, loan sums, and the motivations behind individual loans. The federal reporting additionally incredibly subtleties the endorsements of different types of government-sponsored loans including the Federal Housing Administration, Farm Service Agency, Rural Housing Services, and Veterans Affairs loans.

Federal Regulation C expects lenders to noticeably display a banner in each branch office lobby that gives data on mentioning their unique HMDA statistics. These statistics can likewise be seen by the public online for free at the CFPB data storehouse.

While these statistics are of natural interest to likely borrowers, they can likewise be an important research apparatus for investors researching banking and lending stocks. By looking at the latest few years' statistics, an investor can undoubtedly distinguish whether a lender is developing its core business.

Features

• The goal is to make greater transparency and to safeguard borrowers in the residential mortgage market.
• This data additionally permits regulators, public authorities, and consumer guard dogs to monitor trends in mortgage borrowing and lending for compliance with fair housing and different laws and to direct housing investment and government funding to areas where it is required.
• The Home Mortgage Disclosure Act (HMDA) is a law passed in 1975 that orders mortgage lenders keep up with certain records.