Home Mortgage Disclosure Act of 1975
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| Long title | An Act to extend the authority for the flexible regulation of interest rates on deposits and share accounts in depository institutions, to extend the National Commission on Electronic Fund Transfers, and to provide for home mortgage disclosure. |
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| Enacted by | the 94th United States Congress |
| Effective | December 31, 1975 |
| Citations | |
| Public law | 94-200 |
| Statutes at Large | 89 Stat. 1124 |
| Codification | |
| Titles amended | 12 U.S.C.: Banks and Banking |
| U.S.C. sections created | 12 U.S.C. ch. 29 §§ 2801-2811 |
| U.S.C. sections amended | 12 U.S.C. ch. 3 § 461 et seq. |
| Legislative history | |
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The Home Mortgage Disclosure Act (or HMDA, pronounced HUM-duh) is a United States federal law that requires certain financial institutions to provide mortgage data to the public. Congress enacted HMDA in 1975.
HMDA grew out of public concern over credit shortages in certain urban neighborhoods. Congress believed that some financial institutions had contributed to the decline of some geographic areas by their failure to provide adequate home financing to qualified applicants on reasonable terms and conditions. Thus, one purpose of HMDA and Regulation C is to provide the public with information that will help show whether financial institutions are serving the housing credit needs of the neighborhoods and communities in which they are located. A second purpose is to aid public officials in targeting public investments from the private sector to areas where they are needed. Finally, the FIRREA amendments of 1989 require the collection and disclosure of data about applicant and borrower characteristics to assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes.
As the name implies, HMDA is a disclosure law that relies upon public scrutiny for its effectiveness. It does not prohibit any specific activity of lenders, and it does not establish a quota system of mortgage loans to be made in any Metropolitan Statistical Area (MSA) or other geographic area as defined by the Office of Management and Budget.
US financial institutions must report HMDA data to their regulator if they meet certain criteria, such as having assets above a specific threshold. The criteria is different for depository and non-depository institutions and are available on the FFIEC website. In 2012, there were 7,400 institutions that reported a total of 18.7 million HMDA records.
Companies covered under HMDA are required to keep a Loan Application Register (LAR). Each time someone applies for a home mortgage at an institution covered by HMDA, the company is required to make a corresponding entry into the LAR, noting the following information.
Every March reporting institutions are required to submit their LARs to the Federal Financial Institutions Examination Council (FFIEC), an interagency body empowered to administer HMDA. Nowadays reporting takes place electronically. FFIEC screens the data for errors and the releases it to the public electronically (on CD-ROM and over the internet). Reporting institutions are also required to disclose their individual LARs to members of the public upon request.
HMDA data can be used to identify probable housing discrimination in various ways. It is important to understand that in all cases of possible discrimination, the basic regulatory inquiry revolves around whether a protected class of persons being denied a loan or offered different terms for reasons other than objectively acceptable characteristics (e.g. income, collateral).
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