Why is the Home Mortgage Disclosure Act Important?

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 in an equitable manner. 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.

HMDA public disclosure requirements provide mortgage borrowers access to detailed information about a lender’s practices. When determining which lender to work with, borrowers can use this information to review banks and other financial institutions in their community.

In an article for Bankrate, Christopher Sicuranza explains “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. 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.”

Read the full article on Bankrate where Sicuranza explains what has changed in HMDA's reporting.