Finance
HMDA (Home Mortgage Disclosure Act) requires lenders to:
ADeny loans based on geographic risk
BCollect and report data on mortgage applications, including the race and ethnicity of applicants✓ Correct
CProvide free credit reports to borrowers
DLimit interest rates on high-cost mortgages
Explanation
HMDA requires covered lenders to collect and publicly report data on mortgage loan applications and originations, including demographic information, to identify patterns of discrimination.
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Key Terms to Know
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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