The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board’s Regulation C. Regulation C, requires financial institutions to report public loan data to the Consumer Protection Bureau (CFPB). Specifically, HMDA requires many financial institutions to maintain, report, and publicly disclose information about mortgages.
Why are we required to report this data to the public?
This data is important for several reasons:
- It can show whether lenders are appropriately serving the housing needs of the communities they serve
- It is meant to reveal any lending practices that could be considered discriminatory; and
- It gives public officials important information that can help them when making decisions and writing policies
There are four categories of information that can be found in the public HMDA data; information about the loan itself, demographic information about the applicant(s), information about the lender, and information about the property.
Let’s break down these categories in more detail:
The first category to cover relates to the data on the loan itself. The mortgage applications, approved or denied, will be available. Denied applications will sometimes, also, show the reason for denial. You can see the loan amount and the type of loan. For example, whether it is “ARM”, “FHA”, “VA”, or “USDA.” There are several other types of mortgages not listed as well. This data includes whether the loan is for buying the home, refinancing an existing mortgage, or for home improvements. The second category we will detail is the demographic information about the applicant. We are all taught not to ask the applicant questions relating to their race, ethnicity, and sex, however, HMDA is the exception. The purpose of including this demographic information is to help prevent any discriminatory lending practices, and, in the case of existing discriminatory lending practices, bring that discrimination to light. No identifying information about the applicant will be included.
The third category to cover is the data about the lender. This category is very straightforward including the name of the lender and the agency that regulates them.
The last category to cover is the information about the property securing the loan. The type of property, whether the applicant intends to live there, and the census tract. Census tracts are used in place of addresses to protect the privacy of the owner. They include information about the part of the community where the property is located. On average, 4,000 people live in a census tract.
The previous year’s data will be released to the public each September. The HMDA data and reports are publically available on the FFIEC’s Website.