1. What is the Home Mortgage Disclosure Act (HMDA)?

HMDA, enacted by Congress in 1975, requires most mortgage lenders located in metropolitan areas to collect data about their housing-related lending activity, report the data annually to the government, and make the data publicly available. Initially, HMDA required reporting of the geographic location of originated and purchased home loans. In 1989, Congress expanded HMDA data to include information about denied home loan applications, and the race, sex, and income of the applicant or borrower. In 2002, the Federal Reserve Board (the Board) amended the regulation that implements HMDA (Regulation C) to add new data fields, including price data for some loans (see Q. 9). HMDA does not prohibit any lending activity, nor is it intended to encourage unsound lending practices or the allocation of credit.

2. What are the purposes of HMDA?

Congress enacted HMDA to:

• Provide the public with information to judge whether lenders are serving their communities;
• Enhance enforcement of laws prohibiting discrimination in lending;
• Provide private investors and public agencies with information to guide investments in housing.

3. What are HMDA data?

HMDA data cover home purchase and home improvement loans and refinancings, and contain information about loan originations; loan purchases; and denied, incomplete or withdrawn applications. With some exceptions, for each transaction the lender reports data about the:

• Loan (or application), such as the type and amount of the loan made (or applied for) and, in limited circumstances, its price;
• Disposition of the application, such as whether it was denied or resulted in an origination of a loan;
• Property to which the loan relates, such as its type (single-family vs. multi-family) and location (including the census tract), and
• Applicant’s ethnicity, race, sex, and income.
In 2003, HMDA data included a total of 42 million reported loans and applications. More information about HMDA data can be found at http://www.ffiec.gov/hmda.

4. Are all home mortgage loans covered by HMDA?

Most home-secured loans are included in HMDA data. Some, however, are not included. For example, a home equity loan taken out for consolidation of credit-card debt or to pay for medical expenses is not covered by HMDA, unless some part of the loan proceeds are also intended for home improvement or home purchase purposes. Home equity lines of credit (HELOCs) may not be in the data even if intended for home improvement or home purchase because reporting HELOCs is optional. Additionally, not all mortgage lenders are HMDA reporters. For example, a lender does not have to report HMDA data unless it has an office in a metropolitan statistical area (MSA). As a result, reporting of home loans made in some rural areas may be relatively low.