Are you among the 62% of Americans that carry a mortgage?
If so, you were no doubt thrilled to sign the paperwork and receive the keys to your new home. But have you ever stopped to wonder what happens to all of that paperwork afterward?
Besides you and the lender, who else knows the details of your property mortgage? Find out the answer by reading more about the Home Mortage Disclosure Act.
What Is the Home Mortgage Disclosure Act?
The Home Mortgage Disclosure Act (HDMA) was first enacted in 1975. This federal law requires mortgage lenders to submit key pieces of information to regulatory agencies.
Collectively, this information creates the largest public database of information about the US mortgage market. The goal is to offer more transparency and protect borrowers seeking a home mortgage.
Why Do We Have the HMDA?
Before 1975, there was a lot of concern over the lack of mortgages in some urban (and usually minority) neighborhoods. Some areas seemed to decline and fall into disrepair because many residents were unable to qualify for home mortgages.
Congress took action and passed the HDMA with these goals in mind:
- Monitoring the geographic targets and practices of mortgage lenders
- Providing ways to identify discriminatory or predatory lending practices
- Reporting certain statistics about the mortgage market to the federal government
- Supporting and allocating resources for government-sponsored community initiatives
What’s included in the data lenders need to provide? The gender, race, and income of the applicant are some of the most important facts, along with whether the application was approved or denied.
Who Uses Mortgage Disclosure Data?
This collection of data is useful for a variety of organizations, consumer groups, and government agencies. Bank examiners and private lenders also use this data to ensure compliance with:
- The Fair Housing Act
- The Equal Credit Opportunity Act
- The Community Reinvestment Act
- State-specific laws and regulations
For example, public officials can use HDMA data to decide where and how to best allocate funds and resources in their communities. They can also make informed decisions before adjusting current policies or creating new ones.
Meanwhile, lenders can evaluate the data to determine if they’re adequately serving the local neighborhoods. If there appear to be any trends that point towards discrimination, they can take steps to correct the situation.
It’s important to note that the data is anonymized to protect both borrowers’ and homeowners’ privacy. The goal is to look for overarching trends that show if any adjustments need to be made in lending practices.
What Does This Mean for Your Home Mortgage?
The Home Mortgage Disclosure Act arose out of necessity as a way to protect prospective home buyers.
If you already own your home, rest assured that any public information about your house mortgage is only used for good purposes. In fact, it could even help others be able to buy their own home too!
Would you like to learn more about homeownership, business, or other lifestyle topics? Keep browsing our site for other interesting articles like this one.