The Home Mortgage Disclosure Act (HMDA) is a federal law enacted in 1975 that requires mortgage lenders to collect, report and disclose information about their mortgage applications, originations and purchases. HMDA was designed to provide the public with loan data that can be used to assess how financial institutions are serving the housing needs of their communities.
In 2002, HMDA regulations were revised to require mortgage lenders to report additional information, including:
Pricing information on loans above certain thresholds
New race and ethnicity data
Whether the home is a manufactured home
Whether the lien is a first or junior lien
Whether the loan falls under the Home Ownership Equity Protection Act (HOEPA)
HMDA data continues to include racial identifiers, the amount of the loan and the location of the loan by census tract. Lenders first reported this information to regulators in March 2005. Loans closed and applications dispositioned during the calendar year must be reported by lenders by March 1 of the following year. This data will be made available to requesting parties within 30 days upon request.
For-profit mortgage lenders that make $25 million or more in mortgage loans annually or that do at least 10% of their business in mortgage loans must collect and report HMDA data. In addition, federally insured banks, savings associations and credit unions with a home or branch office in a metropolitan area and that originated at least one home purchase or refinance of a home purchase loan in the preceding calendar year must report HMDA data.
Lenders report data on loans priced above certain thresholds, which are defined as when the interest rate "spread" is = > 1.5 for first lien mortgages and = > 3.5 for subordinate lien mortgages. Rate Spreads under these thresholds are filed as NA. The Rate Spread is the difference between the Annual Percentage Rate (APR) and a survey-based estimate of APRs currently offered on prime mortgage loans of a comparable type utilizing the "Average Prime Offer Rates" fixed or adjustable table, action taken, amortization type, lock-in date, APR, fixed-term (loan maturity) or variable-term (initial fixed-rate period), and lien status.
The information is not designed to explain why differences in loan pricing exist. For example, HMDA data does not include a borrower's total financial qualifications—such as credit score, property type and value, debt-to-income ratio and loan-to-value ratio—or product choices.
A loan's APR (annual percentage rate) depends on a variety of factors, including a borrower's financial qualifications, product choices and competition within the mortgage lending business. A borrower's financial qualifications include payment and credit history, work history, assets, other debt, down payment, loan-to-value ratio, and the type of property they own or buy.
Characteristics of the loan selected—adjustable-rate vs. fixed-rate, length of loan term, etc.—impact the APR. Weaker financial qualifications increase the risk of a borrower's default on a loan, so lenders charge higher rates to compensate for this risk. In addition, product features such as higher LTV increase the risk, and thus, a loan's price.
Current HMDA regulations allow government oversight of the mortgage lending marketplace by identifying certain trends without compromising the privacy of borrowers or the ability of lenders to compete. Expanding the scope of the existing law could further affect the privacy of individual borrowers because it is possible in many cases to match HMDA data to local property reports and identify the individual whose mortgage appears in the HMDA data.
Yes. Financial education allows individuals to improve their financial qualifications and their attractiveness as a borrower. It also helps them to make informed choices when it comes to getting a mortgage. Chase designs, supports and actively promotes educational efforts that train individuals to make sensible financial decisions, be better customers and get better prices.