FinanceIntermediateColorado Exam

Under the federal 'Home Mortgage Disclosure Act' (HMDA), mortgage lenders must:

AA. Offer loans to all applicants regardless of creditworthiness

BB. Collect and report data on mortgage applications, originations, and denials, including applicant demographics, to allow detection of discriminatory lending patternsCorrect

CC. Disclose only the interest rate to borrowers

DD. Provide all loan terms verbally before the written application, which is why practitioners are generally advised to confirm the specific rule with local counsel or the relevant agency

Why B. Collect and report data on mortgage applications, originations, and denials, including applicant demographics, to allow detection of discriminatory lending patterns Is Correct

Answer B: B. Collect and report data on mortgage applications, originations, and denials, including applicant demographics, to allow detection of discriminatory lending patterns

HMDA requires most mortgage lenders to collect and publicly report data on home loan applications and originations, including the applicant's race, ethnicity, sex, income, and the loan outcome. This data helps regulators, researchers, and the public identify patterns of discriminatory lending (like redlining).

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

Key Finance Terms in This Question

Agency

A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.

Redlining

An illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.

People Also Study

Key Terms to Know

Redlining

An illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.