The HMDA was created as a response to findings that banks and other financial institutions contributed to the decline of some communities by not giving qualified members of the community adequate home financing on reasonable terms and conditions. Essentially, qualified bank customers in certain communities were being discriminated against by their banks and were not receiving reasonable loans that would help them pay for their housing.
The HMDA was designed to stop this kind of discrimination by exposing the practices financial institutions used to decide who would receive home financing. In that way, financial institutions would operate in a fair manner with members of the community in order to retain business.
Who Does the HMDA Cover?
Financial institutions that lend money to customers are generally covered under this act. Specifically, there are two categories of lenders that are covered under the act.
The first category of lenders includes banks, savings associations, and credit unions that:
- Are federally insured/regulated
- Provide loans that are federally insured, guaranteed, or supplemented
- Sell the loan to Fannie Mae or Freddie Mac
The second category of lenders is non-depository, for-profit institutions that specialize in lending mortgages.
What Information Must the Lender Disclose under the HMDA?
Lending institutions must report every loan and application they have dealt with in a calendar year. The Federal Financial Institutions Examination Council (FFIEC) looks for specific information in each of these forms when it compiles the data for:
- Race, national origin, sex, and income of mortgage applicants and borrowers
- Date on loan applications, originations, and purchases
- Class of purchaser for home financing
- The reasons for a decision not to grant credit
Can I See the Results of the Data Compiled by the FFIEC?
Yes. Once the FFIEC compiles the data and writes a report, the information for each institution is disclosed to the public. A financial institution covered under the HMDA must post a notice at its home office and its branches to indicate the availability of the report. The institution then must make the report available for anyone who requests to see it.
What Should I Do if My Financial Institution is Not Complying with the HMDA?
The Office of the Comptroller of Currency (OCC) is charged with making sure financial institutions abide by the criteria set forth in the HMDA. If you feel your financial institution is not complying with the HMDA, you may make a complaint with the OCC. Also, if you feel your financial institution may be discriminating against you in terms of securing a loan, you may want to consult a bankcruptcy attorney who has experience in consumer protection. Your attorney can advise you of your rights and let you know if you are entitled to money damages in a lawsuit against your financial institution for discrimination.