Overview of Home Mortgage Disclosure Act (HMDA) and Regulations

December 4, 2009

Author: Barbara van Kerkhove

The key piece of legislation for giving communities and policy makers information about how well banks and other mortgage lenders are serving communities under the Community Reinvestment Act is the Home Mortgage Disclosure Act (HMDA), which was enacted by Congress in 1975 and is implemented by the Federal Reserve Board's Regulation C. This regulation provides the public loan data that can be used to assist:

• in determining whether financial institutions are serving the housing needs of their communities;
• public officials in distributing public-sector investments so as to attract private investment to areas where it is needed; 
• and in identifying possible discriminatory lending patterns.

This regulation applies to certain financial institutions, including banks, savings associations, credit unions, and other mortgage lending institutions.

Regulation C was amended in 2002 to include several new reporting requirements effective with mortgage transactions as of January 1, 2004 and reported to the federal government by March 1, 2005. As a result of these changes, the publicly available HMDA data now includes, for each loan,

• the pricing of the loan and whether the loan’s Annual Percentage Rate (APR) exceeds the Treasury yield threshold (3% for 1st lien mortgages, 5% for subordinate liens) and, if so, how far above the applicable Treasury yield the loan’s APR is; 
• more detailed race/ethnicity data, which is now required to be asked of every applicant and observed for face-to-face applicants if applicant refuses; and 
• whether or not the loan is a federal Home Owners Equity Protection Act loan.

Using the loan data submitted by these financial institutions, the Federal Financial Institutions Examination Council (FFIEC) creates aggregate and disclosure (by institution) reports for each metropolitan area (MA) that are available to the public either online or at central data depositories located in each MA. The online aggregate and disclosure reports are available from 1999 to the most recent completed calendar year on the FFIEC web site. Furthermore, the FFIEC provides to the public various electronic, paper and magnetic media items available through its web site and data request order form.

For more information on HMDA, go to:
FFIEC HMDA Page http://www.ffiec.gov/hmda/
Regulation C http://www.ffiec.gov/hmda/RegC.htm