Home Mortgage Disclosure Act (HMDA or HUM-duh) is a federal act that was enacted in 1975 that requires home mortgage lenders or federal home loan banks in the US to disclose information regarding their lending practices.
The importance of Home Mortgage Disclosure Act
The information provided as part of this act is beneficial for the borrowers because it provides all details such as the number of pre-approvals made by the lender, loan amounts requested, number of approved and granted loans etc.
The act helps the authorities monitor the lenders’ activities and make sure that the government approved resources meant for mortgages are rightly disbursed by the lenders. The main beneficiaries are the borrowers.
In addition to displaying the public disclosure of the data on the lenders premises, this can be viewed online on the FFIEC website.
In short, the borrowers have at their disposal all information regarding the history of the lender. Such disclosures made not only helps the home loan industry run their business fairly but also helps the lender to pick and compare potential lenders.
Loan Application Registry
The details recorded by the lenders in their loan application registry (LAR) include the following information on every single loan processed by them.
- The loan amount
- The loan purpose
- Type of property
- Type of loan
- Location (State/County)
- Race, Ethnicity and Gender of the borrower
- Loan approval status
- Any reason for denial and if so the interest rate proposed
- Secondary market selling details of the loan if any
Next time you apply for a home loan, you might want to look at your lenders online records. You may not be interested in individual records but a consolidated history of the lenders reputation over the past few years might definitely help you as a home loan mortgage.
Don’t you think that the Home Mortgage Disclosure Act has made your life as a borrower a lot better?