The Home Mortgage Disclosure Act (HMDA) is a federal law that requires financial institutions to collect and report data on mortgage lending activity. This data is used to monitor compliance with fair lending laws and to identify patterns of discrimination in lending.
Key Facts
- Applications for Covered Loans: Financial institutions are required to report any applications they receive for covered loans. This includes applications for home purchase loans, home improvement loans, and refinancing loans.
- Origination of Covered Loans: When a financial institution approves and funds a covered loan, it must report the details of the loan, including the loan amount, interest rate, and borrower information.
- Purchase of Covered Loans: If a financial institution purchases a covered loan from another lender, it is also required to report the transaction. This includes loans that were originated by another lender but are now owned by the reporting institution.
It’s important to note that not all transactions are reportable under HMDA. Only transactions involving covered loans fall under the reporting requirements. Covered loans are defined by specific criteria outlined in HMDA and Regulation C.
Covered Transactions
Under HMDA, financial institutions are required to report the following transactions:
Applications for Covered Loans
Financial institutions are required to report any applications they receive for covered loans. This includes applications for home purchase loans, home improvement loans, and refinancing loans.
Origination of Covered Loans
When a financial institution approves and funds a covered loan, it must report the details of the loan, including the loan amount, interest rate, and borrower information.
Purchase of Covered Loans
If a financial institution purchases a covered loan from another lender, it is also required to report the transaction. This includes loans that were originated by another lender but are now owned by the reporting institution.
Exclusions
Not all transactions are reportable under HMDA. Only transactions involving covered loans fall under the reporting requirements. Covered loans are defined by specific criteria outlined in HMDA and Regulation C.
Exclusions from HMDA reporting include:
- Agricultural purpose loans
- Business or commercial purpose loans
- Temporary financing
- Loans secured by a dwelling that is not used as the principal residence of the borrower
- Loans made in connection with a manufactured home that is not permanently affixed to a foundation
- Loans made to a government agency or a qualified non-profit organization
Reporting Requirements
Financial institutions are required to submit HMDA data to the Consumer Financial Protection Bureau (CFPB) annually. The data must be submitted in a format prescribed by the CFPB.
The CFPB uses the HMDA data to produce a variety of reports, including the Annual HMDA Report and the HMDA Disclosure Statement. These reports provide information on lending patterns and trends, and they help to identify areas where discrimination in lending may be occurring.
Conclusion
HMDA is an important law that helps to ensure fair lending practices in the mortgage market. The data collected under HMDA is used to monitor compliance with fair lending laws and to identify patterns of discrimination in lending.
Sources
Consumer Financial Protection Bureau
Home Mortgage Disclosure Act (HMDA) | Consumer Financial Protection Bureau
Home Mortgage Disclosure Act FAQs | Consumer Financial Protection Bureau
FAQs
1. What is HMDA?
HMDA stands for the Home Mortgage Disclosure Act. It is a federal law that requires financial institutions to collect and report data on mortgage lending activity.
2. What transactions must be reported under HMDA?
Financial institutions are required to report applications for covered loans, originations of covered loans, and purchases of covered loans.
3. What are covered loans under HMDA?
Covered loans include home purchase loans, home improvement loans, and refinancing loans.
4. Are all mortgage loans covered by HMDA?
No, only covered loans are subject to HMDA reporting requirements. Excluded transactions include agricultural purpose loans, business or commercial purpose loans, temporary financing, and certain other types of loans.
5. Who is required to report HMDA data?
Financial institutions that meet certain thresholds for mortgage lending activity are required to report HMDA data. This includes banks, credit unions, mortgage companies, and other lenders.
6. How is HMDA data used?
HMDA data is used to monitor compliance with fair lending laws and to identify patterns of discrimination in lending. It is also used to inform policy decisions and to develop programs to promote fair lending.
7. What are the penalties for not reporting HMDA data?
Financial institutions that fail to comply with HMDA reporting requirements may be subject to enforcement actions, including fines and other penalties.
8. Where can I find more information about HMDA?
You can find more information about HMDA on the Consumer Financial Protection Bureau’s website: https://www.consumerfinance.gov/compliance/hmda-data