What Is the Home Mortgage Disclosure Act (HMDA)?

The Home Mortgage Disclosure Act (HMDA) is a federal law that requires lenders to report information about their loan portfolios and lending practices. This data helps regulators determine if lenders are meeting their community’s housing needs, or if they’re favoring one segment of the population over another. 

The HMDA was passed in 1975 to help regulators identify questionable lending practices. The law also provides public officials with the information they need to make better policy decisions regarding mortgages. Keep reading to learn more about the Home Mortgage Disclosure Act, including its purpose and what kind of information lenders need to include in their reports.

What is the purpose of HMDA?

The purpose of the Home Mortgage Disclosure Act is to promote transparency within the mortgage lending market, as well as protect consumers from discriminatory and predatory lending practices. Before the HMDA was passed, borrowers located in urban areas were often denied mortgages without valid reasons. The HMDA is meant to prevent unfair denials and ensure all borrowers are equitably considered for mortgage products.

The HMDA data collected from lenders helps the CFPB and other policymakers to:

• Determine if lenders are serving the housing needs of their communities.
• Identify possible discriminatory lending patterns.
• Provide private investors and public agencies with information to guide housing investments.

What is covered under the Home Mortgage Disclosure Act?

Mortgage lenders that meet Regulation C requirements must annually report details on their residential mortgage applications, originations, and refinances. Regulation C is the HMDA’s legislative name. Details that need to be reported  include information about applicants, loans, loan status, and collateral details. The Consumer Financial Protection Bureau (CFPB) makes and enforces the HMDA rules around what data is collected. Take a closer look at the type of data lenders need to submit:

HMDA reporting requirements

Why is demographic information collected?

According to the Equal Credit Opportunity Act (ECOA), lenders aren’t allowed to discriminate against borrowers based on race, color, national origin, ethnicity, religion, sex, age, marital status, or receipt of public assistance. However, the HMDA requires lenders to collect at least some of this demographic information about borrowers through their loan applications. 

It may seem counterintuitive to request a borrower to reveal information about themselves, which could potentially hurt their chances of getting approved. However, it’s important for regulators to have this information available during their evaluations, so that they can hold lenders accountable if and when they wrongfully deny certain types of borrowers. 

If you suspect a lender has denied you based on one of the demographics mentioned above, you can file a complaint with the Consumer Financial Protection Bureau (CFPB). Regulators will not only have access to your loan application with the lender, but also hundreds if not thousands of loan applications that were submitted before yours through HMDA guidelines. This makes it easier for regulators to determine a lender’s intent when asking you for personal details.

Learn more about how to find and choose a mortgage lender.

Who is required to file an HMDA report?

Mortgage lenders and servicers must report HMDA data each year if they meet Regulation C requirements. This includes banks, credit unions, and non-bank mortgage lenders that meet specific thresholds based on asset size, lending activity, and location. These financial institutions are also required to report their data if they originate at least 100 mortgages, or 200 lines of credit each year, for the past two years. 

Did you know that Zillow is an equal housing opportunity lender? Learn more about how we at Zillow Home Loans* can help you get a mortgage.

Final thoughts on the Home Mortgage Disclosure Act 

The Home Mortgage Disclosure Act (HMDA) holds lenders accountable for their mortgage lending practices and helps promote an equitable lending environment for borrowers. As a mortgage applicant, you can rest assured your mortgage application will be taken seriously due to the HMDA. 

*Zillow Home Loans; an equal housing lender. NMLS #10287