Finance

HMDA (Home Mortgage Disclosure Act) requires lenders to collect and report data about mortgage applications to enable monitoring of:

AMortgage fraud and closing cost abuses

BLending patterns and potential discriminatory lending practices✓ Correct

CMortgage prepayment and default rates

DBorrower credit scores and DTI ratios

Explanation

HMDA requires lenders to collect and report data on mortgage applications, approvals, and denials by the race, sex, and income of applicants, along with geographic data. This data allows regulators to monitor for redlining and other discriminatory lending patterns.

People Also Study

Key Terms to Know

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

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.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

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.