Key takeaways
- Passed in 1975, the Home Mortgage Disclosure Act (HMDA) requires financial lenders to disclose specific details regarding their residential mortgage loans.
- Specifically, lenders must report certain applicant information, like gender and race, along with collateral details, loan information, loan status and other details.
- Enforced by the Consumer Financial Protection Bureau (CFPB), the HMDA prevents unfair lending practices that can be discriminatory to borrowers.
The Home Mortgage Disclosure Act (HMDA), which has been in place for more than four decades, requires mortgage lenders to report information about their lending practices. But how can consumers use HMDA as a resource in their homebuying journey? Keep reading to learn why it’s important and how you can access HMDA data online.
What is the Home Mortgage Disclosure Act (HMDA)?
The Home Mortgage Disclosure Act (HMDA) is a federal law passed in 1975 that requires mortgage lenders to collect and report loan-level data points about their portfolios and practices.
HMDA allows regulators and the public to determine whether lenders are serving the housing needs of their communities equitably. The law also aims to identify lending patterns that could be discriminatory and provides public officials with information on mortgage lending in their communities so they can make better policy and budgetary decisions.
Before HMDA was enacted, “there were areas in which residents, often in urban and minority neighborhoods, were not able to obtain mortgages,” says Jared Maxwell, vice president and direct sales division leader with Embrace Home Loans in Middletown, Rhode Island.
Today, the Consumer Financial Protection Bureau (CFPB) enforces HMDA.
How does the Home Mortgage Disclosure Act help borrowers?
The Home Mortgage Disclosure Act requires mortgage lenders to report information regarding their lending practices to ensure fair and equal lending for all borrowers. It helps to ensure lender accountability within residential mortgages.
What is included in HMDA reporting?
| Applicant information | Ethnicity, race, gender, income |
|---|---|
| Collateral details | Property type, location |
| Loan information | Application date, loan type, loan purpose, loan amount, mortgage rate spreads |
| Loan status | Approved, denied, withdrawn, incomplete, reason for decision |
Among the components included in HMDA reporting are a mortgage applicant’s ethnicity, race, gender and income. “For each record, you can learn about the loan, the property characteristics, the applicant demographics and the lender,” says Maxwell.
For example, you can determine if a borrower received a mortgage or if they were denied, if they didn’t complete the application or if something else happened to prevent the loan from being originated.
Loan-specific pricing and fee information, including negative spreads, are also reported, as well as details on loan features like balloon payments and negative amortization features. The data further includes details about preapprovals and loans sold from one institution to another.
Some data are excluded from public reporting to safeguard an applicant’s privacy, such as the applicant’s name and credit score, the application date and actions taken. Additional fields, including exact loan amount, age, debt-to-income (DTI) ratio and property value, are modified into ranges for this same reason.
How can you access HMDA data online?
You can access HMDA data easily and for no cost online through the CFPB website. Scroll to the “Download HMDA data” section, where you have the choice of downloading data from years 2007 to 2017 or accessing more recent data and summaries, including data for a particular financial institution.
The Federal Financial Institutions Examination Council (FFIEC) has the most recent HMDA data. There is also an HMDA Data Browser that lets you filter, aggregate, download and visualize HMDA datasets.
Why is HMDA important?
HMDA data serve as a comprehensive source of publicly available information on the U.S. mortgage market. The information offers valuable insights, such as:
- Whether lenders adequately serve the mortgage lending needs in their area
- Whether there are any discriminatory lending practices occurring
- Whether an area needs public or private investment to help revitalize its property market
“For example, consumers searching for a mortgage loan can compare the publicly available lending data for differences in credit decisions, terms and pricing by age, race, ethnicity or geography among various financial institutions available to them for their lending needs,” says Christopher Sicuranza, partner and head of the Banking, Insurance and Capital Markets Practice for Guidehouse, a management consulting firm in Washington, D.C. “Therefore, the HMDA data provide an opportunity for consumers to vote with their wallets and only do business with those financial institutions they believe align with their values based on prior lending activity.”
Lenders also use the data, says Kimberly Wachtel, banking officer for Old Second National Bank in Chicago, Illinois. “It can tell us a lot about our own business, what our peers are doing, and where we may differ and/or align. When lenders are more in tune with their loan performance, they can better serve their communities. Financial institutions should review their data regularly to ensure their loan data lines up with their lending model.”
History of HMDA reporting
Over the years, HMDA has experienced a few facelifts to better fulfill its goals, including changing who’s required to report the data, adding pricing information and requiring more data to be collected overall, says Wachtel.
Today, mortgage lenders are required to complete more than 100 fields across several data points on either an annual or quarterly basis, based on the institution’s size and using a new reporting platform, according to Sicuranza.
“The increase in the number of data fields, as well as improvements in public accessibility and the technological interface, allow for all members of the public to better understand and visualize lending patterns in their communities,” says Sicuranza.
The Consumer Financial Protection Bureau recently began soliciting input on HMDA, as well. “In other words, even more HMDA changes may be on the way for consumers to keep on their radar,” says Sicuranza.
FAQ on Home Mortgage Disclosure Act (HMDA)
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According to the most recent annual report from the CFPB, released in September 2023, the higher interest rate environment has profoundly affected the mortgage market, with borrowers paying significantly larger monthly mortgage payments—a trend that’s expected to continue, given the continued rise in rates. Other trends:
- Borrowers paid much more in closing costs and lender fees
- The majority of refinances were cash-out refis
- Lenders increasingly denied applicants for insufficient income
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Lenders are required to submit HMDA reports annually regarding all residential mortgage applications, originations and refinances. Reports are filed for each full calendar year and must be submitted by March 1st of the following year.
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The Home Mortgage Disclosure Act is covered within the Federal Reserve’s Regulation C (12 CFR Part 1003) and was originally enacted by Congress in 1975. Regulation C requires financial institutions to collect and report data regarding residential mortgage lending, including details regarding the applicant and the loan itself. This data is then used to ensure fair lending practices throughout the U.S.
Additional reporting by Jean Folger
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