Definition of Home Mortgage Disclosure Act
HMDA stands for Home Mortgage Disclosure Act and it is a law in the United States under which certain financial institutions are required to maintain, report and publicly disclose mortgage data to the public.
Brief Explanation of the Home Mortgage Disclosure Act
Purpose: The purpose of this disclosure is to ensure that either these mortgage institutions are providing appropriate services towards the housing needs of the community and there is no discriminate in lending practice. It helps them make decisions and policies regarding the area of improvements etc. It is also to make sure if Government resources are well allocated and policies well followed.
Background: This mortgage act was approved back in 1975 by Congress in the United States and it required Banks, mortgage lenders, and other financial institutions to keep record and disclose their lending practice to the public in a certain manner. In July 2011 the Regulation Authority was transferred from FRB (Federal Reserve Board) to CFPB (Consumer Financial Protection Bureau)
Information disclosure required: The information that needs to be disclosed include a number of mortgages granted, their amounts, upcoming or pre-approved applications, etc.
The website where the information can be found is (www.ffiec.gov/hmda)
This information can help the public investors to invent and invest in areas where needed.
Normally lenders are required to display the list of information outside their branch office.
HMDA data is normally published during September month of every year. This data can be studied with the census report of the same year for demographic information and analysis purpose.
On one side these reports are of natural interest to the potential borrowers, and on the other side, they are also an important research tool for investors who are researching on banking and lending stocks. By comparing the previous few year’s reports and trends, an investor can easily identify whether or not a lender is growing their core business.
