The HMDA Regulatory

 


The Housing and Community Development Act of 1992 was a United States federal law that required the government to collect data on mortgages made within its borders. This data would then be used to determine if lenders were discriminating against applicants based on their race or ethnicity. The new law required lenders to report information on both approved and rejected loan applications, as well as loan applications that were withdrawn. 
 
The data was also to include borrowers' income, location of the property, and the census tract in which the property was located. In doing so, any lender who made a federally related mortgage had to report this information to a government office called the Home Mortgage Disclosure Act (HMDA) office.
 
When applying for a home mortgage, lenders were required to report any personal information they collected on the application. This would include: Social Security Number, name, current and previous addresses of the applicant, employment details, income level of all applicants living in the home as well as mortgage applicants who made up the household purchasing the property. All this data was then used for aggregate analysis by HMDA officials to determine if applicants were receiving loans based on their race or ethnicity.
 
The new regulations also required that average loan rates and fees be provided by census tract, municipality and state. In turn, these data would aid in determining whether lenders had been discriminating against any applicants on the basis of race or ethnicity. This information was to be collected from all the lenders who were making applications for home mortgages. 
 
In cases when there are second mortgages, it is considered as another refinancing and thus must be reported. But in cases of home equity lines or credit, they need not be reported. It is important to note that the HMDA only deals with conventional home mortgages, not FHA or VA loans.
 
Since the law was first introduced, it has been amended as needed. The following information outlines some of what is involved in collecting and analyzing HMDA data.
 
The new law required lenders to report information on both approved and rejected loan applications as well as loan applications that were withdrawn. The purpose of the law was to collect and analyze mortgage data in order to determine whether lenders were discriminating against applicants based on their race or ethnicity.
 
The data collected by HMDA is used for aggregate analysis by government officials who look at the number of mortgages lenders approve and deny based on an applicant's race or ethnicity. An alternative post for more info on the topic here: https://en.wikipedia.org/wiki/Mortgage_law.
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