Finance
The Home Mortgage Disclosure Act (HMDA) requires lenders to:
AApprove all mortgage applications from protected classes
BCollect and report data on mortgage applications and originations by race, gender, and other factors✓ Correct
COffer identical interest rates to all applicants
DProvide free mortgage counseling to first-time buyers
Explanation
HMDA requires covered lenders to collect and report demographic and financial data on mortgage applications, helping regulators identify and address discriminatory lending patterns.
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Key Terms to Know
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.
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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