Enacted by Congress in 1975, the Home Mortgage Disclosure Act (HMDA) requires banks, savings and loan associations, and other financial institutions to publicly report detailed data on their home lending activity. The importance of HMDA cannot be over-emphasized. Over the years, community organizations and concerned citizens have used HMDA data as a tool to determine which banks are lending in their community. 

Enacted by Congress in 1975, the Home Mortgage Disclosure Act (HMDA) requires banks, savings and loan associations, and other financial institutions to publicly report detailed data on their home lending activity. The importance of HMDA cannot be over-emphasized. Over the years, community organizations and concerned citizens have used HMDA data as a tool to determine which banks are lending in their community. Are banks marketing to minority and low-income communities? Are some banks denying a much higher percentage of applications from these neighborhoods than their competitors? Are lending institutions responding to the need for home improvement loans as well as home purchase loans? These are some of the questions that have been addressed by community groups over the years through the analysis of HMDA data. 

HMDA data analysis can be used to forge partnerships among banks and community organizations. A weakness in a lender’s performance in a minority or low-income community should be regarded as an opportunity. HMDA analysis can show a lender that it can gain profitable business if it loans to creditworthy but underserved populations. In addition, HMDA analysis helps community groups identify credit needs that are not being met by lenders. A HMDA analysis therefore, can encourage community groups and lenders to work together to design marketing campaigns and affordable lending products that reach underserved populations.

NCRC’s President and CEO John Taylor is fond of saying that “data drives the economic justice movement.” HMDA analysis has indeed leveraged reinvestment dollars for minority and lower income neighborhoods by identifying credit needs for lender-community partnerships to tackle and address.

This fact sheet will provide an overview of what HMDA data is and how it can be obtained.

What is HMDA Data and How Can it Be Obtained

What Data is Reported

Under HMDA, lenders are required to publicly disclose the number of loan applications by census tract, and by the income, race, and gender of the borrower. The law requires institutions to indicate the number and dollar amount of the loans made.

If community organizations and citizens are conducting a longitudinal study with several years of HMDA data, they need to be aware of increased reporting requirements starting with the 1990 HMDA data. Prior to 1990, lenders were required to report the census tract containing the property for which the applicant succeeded or failed in obtaining a home loan. The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) required lenders to report the race, gender, and income of loan applicants and borrowers starting in 1990. Thus, HMDA data before 1990 reveals information only on the census tract location of the application or loan whereas HMDA data after 1990 includes information on borrower characteristics. Also, starting with 1993, independent mortgage companies were required to report HMDA data.

Further changes to the data must be kept in mind when conducting longitudinal analyses. The data for 2003 and subsequent years use 2000 census tract boundaries whereas data in earlier years use the 1990 census boundaries. Also, the data for 2004 and subsequent years contain different racial and ethnic categories.

HMDA requires lenders to report on a number of possible actions or “dispositions” on loan applications. Each year, the lender must report the number of loan applications it approved and denied. The lender must also indicate how many of its loan approvals were unaccepted (the bank approved the application but the applicant did not want the loan). Finally, the lender must specify how many applications were withdrawn (the applicant withdrew his application before the bank made a credit decision), and how many applications were incomplete (the application was not considered because the applicant did not provide all the necessary information).

Housing loans covered by HMDA include home purchase, home improvement, and refinancing loans for single family dwellings (1 to 4 units) and loans for multi-family units. Lenders must disclose whether the loan was a conventional loan or a loan insured by a government agency such as the Federal Housing Administration (FHA), the Veterans Administration (VA), the Farm Service Agency (FSA), and the Rural Housing Service (RHS). Additional information reported includes the occupancy status of the property (owner occupied or non-owner occupied). The lender must also indicate if the loan was purchased on the secondary market and the type of institution that bought the loan (for example, another bank or Fannie Mae or Freddie Mac).

Who is Covered by HMDA

A depository institution (bank, savings and loan, thrift, and credit union) must report HMDA data if it has a home office or branch in a metropolitan statistical area (MSA) and has assets above a threshold level that is adjusted upward every year by the rate of inflation. Before 1997, small depository institutions were exempt if they had assets less than $10 million. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 amended HMDA to adjust the exemption level to take into account annual inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. For the 1997 data, the asset level for exemption was increased from $10 million to $28 million (to take into account inflation occurring between 1975, the first year of HMDA data, through 1996). For the year 2006, the asset level for exemption was $35 million.

In addition, a depository institution is not required to report HMDA data if it did not make a home purchase loan on a 1-to-4 unit dwelling (or if it did refinance a home purchase loan) during the previous calendar year.

Many non-depository institutions must also report HMDA data. An example of a non-depository institution is a mortgage company that does not accept deposits but raises funds for lending by borrowing from investors. A non-depository institution must report HMDA data if it has more than $10 million in assets and it originated 100 or more home purchase loans (including refinances of home purchase loans) during the previous calendar year. A non-depository institution is exempt from HMDA reporting requirements if its home purchase loans (including refinances of home purchase loans) were less than 10 percent of all of its loan originations, measured in dollars, during the previous calendar year.

Gaps in HMDA Data

Small lenders and lenders with offices only in non-metropolitan areas (as noted above) are exempt from HMDA data reporting requirements. Data for rural areas is also incomplete, particularly information on the census tract location of loans. If banks and thrifts have assets under $1 billion dollars (starting in 2005, asset level is adjusted annually for inflation), they do not have to report the census tract location for loans in MSAs (metropolitan statistical areas) in which they do not have any branch offices nor do they have to report the census tract location for loans outside of MSAs.

Non-depository institutions do not have to report the census tract location of loans made in non-metropolitan areas. They have to report the census tract location of loans in those MSAs in which they received applications for, originated, or purchased five or more home purchase or home improvement loans during the preceding calendar year.

Another area of incompleteness concerns race and sex information of applications taken via the phone for data prior to 2003. When applications are made in person, the loan officer is required to ask the applicant about his/her race. If the applicant refuses, the loan officer is required to record race on the basis of visual observation or applicant surname. The loan officer is required to inform the applicant that this information is required by federal law designed to combat discrimination. In contrast, when applications are received over the phone, the loan officer was not required to ask for the race and sex of the applicant prior to 2003. When applications are received through the mail, the lending institution is required to ask for the race and gender of the applicant.

In the case of the electronic media, the official staff commentary to the HMDA regulation states that lenders are required to ask for race and gender when applications are received over the Internet. When lenders are using electronic media with a video component, lenders are to use the same procedures as if the application is made in person.

Finally, a lender is not required to report the race, sex, and income data for loans that they purchase from another institution.

NCRC will be working to close the gaps in HMDA data. In the meantime, however, it is important to remember that while the data is not perfect, it is critical to efforts to combat discrimination and identify unmet credit needs by monitoring progress in lending to traditionally underserved communities and borrowers.

Improvements in HMDA Data

In the summer of 2002, the Federal Reserve Board made some significant changes to HMDA (the Federal Reserve has statutory responsibility to promulgate the HMDA regulations). Lending institutions were required to ask borrowers applying over the phone for their race and gender, starting in 2003.

Starting in 2004, non-depository institutions making at least $25 million in home purchase loans will be required to report HMDA data. This will capture more non-depository as HMDA reporters when combined with the other thresholds described above. Lending institutions will also be required to indicate in HMDA data if the loans were for manufactured homes or traditional single family residences. The Federal Reserve will also require lenders to report price information if the Annual Percentage Rate (APR) on their loans exceed the rate on Treasury securities of comparable maturities by three percentage points for first-lien loans and five percentage points for second-lien loans.

Other changes to HMDA data beginning in 2004 include improving the definition of home improvement and refinance loans, requiring an indication if a loan is covered by the Home Ownership and Equity Protection Act, and requiring pre-approvals to be reported for home purchase loans. Finally, but importantly, lenders will be required to indicate the identity of their parent companies in HMDA data.

How Can HMDA Data Be Obtained

Financial institutions will make HMDA data for the preceding calendar year available by March 31 (for requests submitted on March 1). March 31 is the earliest a member of the public can receive HMDA data from a bank. The Federal Financial Institutions Examination Council (FFIEC) typically makes HMDA data available in early September for the preceding calendar year. The FFIEC data contains aggregate data (all lenders reporting data in various geographical areas) as well as data for individual institutions. HMDA data is available in a number of formats from a variety of sources:

NCRC’s Data Hotline

The National Community Reinvestment Coalition offers a Data Hotline which provides analyses of HMDA data for NCRC members and community groups. Each year, NCRC produces about 50 to 60 customized data analyses for community organizations working in partnerships with banks or assessing the credit needs in their neighborhoods. NCRC uses a software product, CRA Wiz, to produce state-of-the-art maps and charts that powerfully display HMDA data. To obtain NCRC HMDA data analyses, contact NCRC’s Research and Policy Department at (202) 628-8866.

The Federal Financial Institutions Examination Council

The Federal Financial Institutions Examinations Council (FFIEC) is an interagency council that reports HMDA data compiled by the four federal banking agencies (the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision). The FFIEC can provide HMDA data for a fee in a variety of formats from paper copy, CD Disc, to floppy discs. The FFIEC’s HMDA Assistance Line is 202-452-2016. Also, the FFIEC’s web page (www.ffiec.gov) has on-line data available in summary form on a metropolitan level.

The FFIEC can provide HMDA data in either summarized form or in raw form. Bank disclosure tables are summary tables for each lender. They include the number and disposition of applications by race, gender, and income for all types of home loans. Loan action is also broken out by census tract. The FFIEC can also provide LARs (Loan Application Registers). A LAR is the raw and unanalyzed database that a bank reports to the FFIEC. LARs for individual banks or LARs for all banks in a metropolitan area or region can be obtained from the FFIEC.

Warning to Users of HMDA Data Available over the FFIEC Internet Site

NCRC has discovered that data reported by the Federal Financial Institutions Examination Council (FFIEC) over their web site is less complete for metropolitan areas than the raw data the FFIEC provides to the general public. Specifically, if a lending institution does not have a branch in a metropolitan area but lends in that area, the HMDA data available via the FFIEC website of http://www.ffiec.gov will not have information on lending in that metropolitan area. In contrast, the raw data on CD-rom that the FFIEC provides will have information on lending in metropolitan areas in which lending institutions do not have branches. This is inconsistent and confusing reporting on the part of the FFIEC. The FFIEC should eliminate this discrepancy.

Lenders

All lenders are required to maintain copies of their disclosure statements (for the past five years) at their home office and at least one office in each MSA where the bank has offices. The disclosure statement is required to maintain data only relating to the residential properties in the MSA where the branch office is located. Lenders are required to post a public notice in the lobbies of their offices located in MSAs regarding the availability of their HMDA data. Lenders must deliver data to the person requesting it within fifteen calendar days of receiving a written request. A lender may charge a “reasonable cost” for providing a copy of the disclosure statement, which can be in paper form or PC diskette or in any other form acceptable to the person requesting it.

Local Government Agencies

Local depositories also make HMDA data available to the general public. These depositories are either libraries or local government agencies. Data for all lenders doing business in a particular metropolitan area are available at the depositories. The FFIEC provides the location of depositories. The FFIEC can be contacted at (202) 452-2016 or can be accessed via the Internet at the www.ffiec.gov.

The citation for the Home Mortgage Disclosure Act (HMDA) is 12 U.S.C 2801. The citation for Regulation C, which implements HMDA, is 12 CFR 203.

If you have any questions, please call the NCRC Research and Policy Department on (202) 628-8866.