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HMDA: What Is It and Why Is It Important?

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Spotting lending discrimination can be difficult, but there’s a way to identify and, ultimately, root it out. The Home Mortgage Disclosure Act, or HMDA, is a law that requires most mortgage lenders to provide detailed information about each loan they close.

Regulators and policymakers use the information to ensure that lenders follow fair lending laws and offer affordable housing finance options to aspiring homeowners. Plus, HMDA data can help public officials detect discriminatory patterns and better enforce lending discrimination laws.

What is the Home Mortgage Disclosure Act (HMDA)?

The Home Mortgage Disclosure Act of 1975 requires financial institutions to disclose information about their mortgage lending activities. The Consumer Financial Protection Bureau (CFPB) estimates that 49.1% of lending institutions reported HMDA data in 2019. However, HMDA lenders originated about 88% of all mortgage loans made in 2019, making it the largest and most detailed source of mortgage activity data.

HMDA data is used for three primary purposes:

  1. To make sure a lender serves the housing finance needs of its community
  2. To identify practices that might be discriminatory
  3. To provide investors and public agencies with data to encourage investment, and to promote homeownership

HMDA regulations don’t apply to all lenders, though. Some financial institutions may be exempt from HMDA reporting, including:

  • Depository banks without branches in metropolitan statistical areas (MSAs)
  • Lenders that are not federally insured or regulated
  • Institutions that don’t offer government-backed loans
  • Lenders that don’t sell their loans to Fannie Mae or Freddie Mac

Why is HMDA reporting important?

Before Congress enacted HMDA in 1975, the public was concerned about the lack of affordable mortgages in certain neighborhoods. Urban areas seemed to suffer because of limited home loan options for minority residents.

HMDA public disclosure requirements make lenders accountable for their practices by giving the public access to detailed information about the loans the lenders originate. Public officials and policymakers also use the data to guide their decisions on how to distribute funds to promote housing in targeted neighborhoods.

Most importantly, HMDA data allows regulators to investigate lending discrimination trends. The data can be used to build cases against mortgage companies that violate the Equal Credit Opportunity Act (ECOA), which prohibits lenders from discriminating against mortgage and home improvement loan borrowers.

How does HMDA data identify lending discrimination?

The Consumer Financial Protection Bureau (CFPB) uses HMDA data as a tool to determine if lenders are intentionally (or unintentionally) discriminating against borrowers. For example, data may reveal that a lender has a higher percentage of higher-priced loans made to minority borrowers than nonminorities, or that it has denied mortgage credit to a disproportionate number of people within a protected class.

Below are some significant findings from the CFPB’s 2019 Mortgage Market Activity and Trends report, based on data from 8.1 million closed loans in 2019.

Black homebuyers were more likely to be denied for mortgages

Overall denial rates declined from 2018 to 2019, but were still higher among Black and Hispanic white borrowers for both purchases and refinances for all loan types.

Loan type and purpose Applicant race or ethnicity Denial rate
Conventional and nonconventional purchase Asian
Black or African American
Hispanic white
Non-Hispanic white
Conventional and nonconventional refinance Asian
Black or African American
Hispanic white
Non-Hispanic white

Minorities took out higher-priced mortgages

In 2019, Blacks and Hispanic whites were more likely to take out a mortgage with an annual percentage rate (APR) that was 1.5% or more higher than the average rate offered for a similar loan, according to the CFPB’s 2019 Mortgage Market Activity and Trends report.

Loan type and purpose Applicant race or ethnicity Percentage of nonconventional loans
Conventional and nonconventional purchase Asian
Black or African American
Hispanic white
Non-Hispanic white
Conventional and nonconventional refinance Asian
Black or African American
Hispanic white
Non-Hispanic white

Minorities bought homes with more expensive government-backed loans

The 2019 CFPB report also revealed that the higher percentage of higher-cost loans made to Blacks and Hispanic whites may be due, in part, to using government-backed (nonconventional) loans to buy homes.

Loan type and purpose Applicant race or ethnicity Percentage of nonconventional loans
Nonconventional purchase Asian
Black or African American
Hispanic white
Non-Hispanic white
Nonconventional refinance Asian
Black or African American
Hispanic white
Non-Hispanic white


Borrowers with lower credit scores and higher debt-to-income (DTI) ratios usually opt for mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the U.S. Department of Veterans Affairs (VA), because of their more lenient borrowing guidelines.

FHA loans, however, come with much higher mortgage insurance premiums than other loan types. In 2019, 36.5% of purchase FHA loans were higher-priced, according to HMDA data.

Major changes to HMDA race and ethnicity reporting

Before 2015, borrowers had fewer choices to identify their race or ethnicity on a standard loan application. The options for race included:

  • American Indian or Alaska Native
  • Asian
  • Black or African American
  • Native Hawaiian or Other Pacific Islander
  • White
  • Information not provided by the applicant in mail, internet or telephone application
  • Not applicable

There were originally only two categories for ethnicity reporting:

  • Hispanic or Latino
  • Not Hispanic or Latino

The table below reflects identity and race options added under the new HMDA regulations.

Asian Native Hawaiian or
other Pacific Islander
Hispanic or Latino
Asian Indian
Other Asian
Native Hawaiian
Guamanian or Chamorro
Other Pacific Islander
Puerto Rican
Other Hispanic or Latino

What is included in HMDA reporting?

Lenders covered by HMDA must provide a Home Mortgage Disclosure Act Loan Application Register (HMDA LAR) with information about purchase, refinance and home improvement loans originated in a given year.

Over time, regulators have significantly increased the amount of mortgage information that lenders must provide to analyze home mortgage lending patterns in underserved neighborhoods.

Data points collected under original HMDA rules include:

  • The loan disposition. This explains whether the loan was approved, denied or withdrawn.
  • The type of loan. Is the loan conventional, FHA, VA, USDA, jumbo, etc.?
  • The purpose of the loan. Is it a purchase, refinance, cash-out refinance, home equity loan, home equity line of credit (HELOC) or reverse mortgage?
  • Characteristics of each loan. These items include the loan amount, term and rate type (adjustable versus fixed).
  • Census-tract designation. Census tracts are small areas within a county defined by state, local or tribal governments used for statistical data. The ideal census tract population size is about 4,000 people, although the number can range from 1,200 to 8,000 people.
  • Loan pricing information. Regulators analyze how lenders set their rates to make sure fair lending laws aren’t being violated, such as charging higher rates to borrowers in minority neighborhoods.
  • Demographic information, including:
    • Race
    • Ethnicity
    • Sex
    • Income
    • Information about where the loan was sold

New HMDA data points

In the aftermath of the 2008 housing crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA) added 13 new data points:

  • Borrower age.
  • Total points and fees. Average loan closing costs range from 2% to 6% of the loan amount. These include lender origination fees and any discount points you pay to get a lower rate.
  • Rate spread for all loans. HMDA-reporting lenders must use a special calculator to determine how many higher-priced loans are made, and the race and ethnicity of the borrowers.
  • Prepayment penalty term. Prepayment penalties assess a charge for paying off a loan before a set time frame, but are rarely charged today.
  • Property value. Lenders may report the value based on a home appraisal or the purchase price of the property.
  • Introductory rate period. Adjustable-rate mortgages and HELOCs may offer a lower initial fixed rate for an introductory period, followed by a variable-rate repayment period.
  • Non-amortizing features. This typically refers to interest-only payment options for HELOCs.
  • Loan term. This is how long you have to repay the loan.
  • Application channel. This provides information about whether the loan was originated with a mortgage broker, mortgage banker or an institutional lender.
  • Credit score.
  • Mortgage loan originator identifier. The DFA created new licensing requirements for loan officers, including an assigned identifier number to track the loan officer’s lending practices.
  • Universal loan identifier. A number assigned to any HMDA-covered loan that follows its progress throughout the application process for data reporting purposes.
  • Property address.

Additional HMDA reporting requirements

In 2015, the CFPB expanded the scope of reportable details to address predatory lending concerns exposed during the financial crisis. The following data points were added to help public officials develop foreclosure relief programs and promote neighborhood stability:

  • Origination charges. When a mortgage company lends money, it’s called an “origination,” and the origination fee is part of your closing costs. The fee covers the lender’s costs to process your loan and the associated paperwork.
  • Discount points. Also called mortgage points, discount points are fees paid upfront to buy down your loan’s interest rate and lower your monthly payment.
  • Lender credits. Commonly associated with “no-closing-cost” mortgages, lender credits must be reported by HMDA-covered lenders.
  • Reasons for loan denial. Lenders must explain in writing why a borrower is being denied a mortgage.
  • Interest rate. The mortgage interest rate is reported separately from the APR.
  • Debt-to-income ratio. Lenders use the DTI ratio to determine if you can afford a mortgage by dividing your total monthly debt payments by your gross monthly income to get a percentage.
  • Combined loan-to-value ratio. Your loan-to-value (LTV) ratio is the percentage of your home’s value that’s being borrowed, expressed as a percentage. Combined loan-to-value ratios are used to calculate how much additional equity you can borrow by adding the balance of a home equity loan or HELOC to your first mortgage balance.
  • Manufactured home type. Manufactured homes are factory-built according to U.S. Department of Housing and Urban Development (HUD) guidelines, moved to a site and permanently attached to a foundation to be considered real estate.
  • Manufactured home land interest. Mortgages for manufactured homes placed on a permanent foundation and titled as real estate are reported under HMDA.
  • Multifamily affordable units. HMDA tracks loans made on income-restricted apartment buildings, condominium complexes, cooperative buildings and manufactured home communities with five to as many as 300 units.
  • Automated underwriting system. Most mortgages are approved by automated underwriting systems; manual underwriting is for borrowers with more challenging financial profiles.
  • Reverse mortgage flag. A reverse mortgage is a loan that allows homeowners 62 years or older to tap their home’s equity, and lenders are required to report them under HMDA guidelines.
  • Open-ended line of credit flag. In the past, HELOCs were not covered under HMDA, but the CFPB added HELOCs to the reportable detail list.
  • Business or commercial purpose flag. This typically refers to rental properties or multifamily homes with three or more units.

Where to find current HMDA data online

Here’s a listing of agencies that provide access to current and past HMDA data:

  • The Federal Financial Institutions Examination Council (FFIEC) provides the latest HMDA data collected after 2017.
  • The CFPB reports HMDA data collected from 2007 to 2017.
  • The National Archives provides access to historical HMDA data.

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