What Is the Home Mortgage Disclosure Act (HMDA)?
The Home Mortgage Disclosure Act (HMDA) is a federal law which got approved in 1975.
According to this act, the mortgage lenders are required to keep records of key pieces of information about their lending practices, which they must submit to regulatory authorities.
The Federal Reserve through Regulation C implemented it. In 2011, the Consumer Financial Protection Bureau (CFPB) got the rule-writing authority of Regulation C.
Explanation of Home Mortgage Disclosure Act?
The Home Mortgage Disclosure Act and Regulation C both need requirements for regulatory submissions and public disclosures.
In Title 12, Chapter 29 of the United States Code you can find the entire Home Mortgage Disclosure Act of which Regulation C is also an important component.
The Federal Reserve created Regulation C to overlay the requirements of the Act and designate certain additional requirements that banks must follow.
The aim of the Home Mortgage Disclosure Act and Regulation C is to watch the geographic targets of mortgage lenders, identifying the predatory or discriminatory lending practices, and report to the government on statistics about the mortgage market.
By providing a means for analyzing the allocation of resources the HMDA also helps support government-sponsored community investment initiatives.
The government agencies, consumer groups, and bank examiners use the data to determine compliance with various federal fair housing and credit laws including the Equal Credit Opportunity Act, the Fair Housing Act, and the Community Reinvestment Act (CRA), and state laws.
In accordance with the Home Mortgage Disclosure Act of 1975 the Federal Financial Institutions Examination Council (FFIEC).
In 1980, was given the responsibility of facilitating public access to mortgage information from financial institutions.
Even though the HMDA asks lenders to identify the sex, race, and income of those applying for or obtaining mortgages, in record keeping the data is anonymized.
With this data, the FFIEC gets to monitor trends in housing and mortgage borrowing and lending, like a reported rise in mortgage borrowing by Blacks and Hispanics as of 1993.
HMDA Reporting
For reporting purposes, certain mortgage lenders are required to maintain records of specified mortgage lending information Under the HMDA and Regulation C.
8.1 million loan originations were reported by 5,496 lenders in 2019, representing 88% of the total estimated loan originations in the United States of America.
HMDA rules
In April 2020, a final rule was issued by the CFPB wherein the data-reporting thresholds were raised to 100 from 25 loans for collecting and reporting data about closed-end mortgage loans under the HMDA that became effective from July 1, 2020.
Regulators are allowed to analyze information on mortgage loans and mortgage lending trends in a number of categories, like the number of pre-approvals made, the number of mortgages granted, loan amounts, and the purposes of individual loans with HMDA reporting.
The detailed approvals of different types of government-sponsored loans like the Federal Housing Administration, Farm Service Agency, Rural Housing Services, and Veterans Affairs loans are included in federal reporting.
Lenders are required by the Federal Regulation C to prominently display a poster in every branch office lobby that provides information on requesting their unique HMDA statistics.
The CFPB data repository provides viewing of these statistics by the public online for free.
While potential borrowers have a natural interest in these statistics they are also an important research tool for investors researching banking and lending stocks.
An investor can easily identify whether or not a lender is growing its core business just by comparing the most recent few years’ statistics.
Conclusion
A law passed in 1975 that mandates mortgage lenders maintain certain records is the Home Mortgage Disclosure Act (HMDA).
The intention of the implementation of the act was to create greater transparency and to protect borrowers in the residential mortgage market.
These records allow regulators, public officials, and consumer watchdogs to monitor trends in mortgage borrowing and lending for compliance with fair housing and other laws and to direct housing investment and government funding to places that require it.
https://www.compareclosing.com/blog/home-mortgage-disclosure-act-hmda/
What is FHLMC or Federal Home Loan Mortgage Corporation?In 1970 the Congress chartered the Federal Home Loan Mortgage Corp (FHLMC).FHLMC is a stockholder-owned, government-sponsored enterprise (GSE) that is formed to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle-income Americans.The FHLMC, more famously known as Freddie Mac, purchases, guarantees, and securities mortgages to form mortgage-backed securities.Understanding Freddie MacWhen Congress passed the Emergency Home Finance Act in 1970 that is when Freddie Mac was created.This was done with an intention to expand the secondary mortgage market while reducing interest rate risk for banks.In 1989 Freddie Mac underwent a reformation and was turned into a shareholder-owned company, now under the Financial Institution Reform, Recovery and Enforcement Act (FIRREA).Freddie Mac was created to improve and intensify the flow of credit to different parts of the economy.
In 2017 Freddie Mac and a similar GSE, Fannie Mae securitized and guaranteed about 46% of U.S. mortgage originations.They do not originate or service mortgages, but they buy loans from mortgage lenders.After purchasing these large number of mortgages, the GSEs combine and sell them as mortgage-backed securities, which tend to be very liquid and carry a credit rating close to that of U.S. Treasuries.This process also frees up the capital of mortgage lenders, who can then lend that same money again.Because of its ties with the U.S. government, Freddie Mac is allowed to borrow money at interest rates lower than those available to other financial institutions resulting in it coming under criticism.With this funding advantage, large amounts of debts known as “agency debt” or “agencies” are issued and Freddie Mac successively purchases and holds a huge portfolio of mortgages called a “retained portfolio.”There is the belief that the size of the retained portfolio combined with the complexities of managing mortgage risk will result in huge systematic risks to the U.S. economy.Critics have argued that the unchecked growth of Fannie Mae and Freddie Mac is the cause of the credit crisis in 2008 which turned into the Great Recession, and some disagree with this argument.Difference between Fannie Mae and Freddie MacAs part of an amendment to the National Housing Act Fannie Mae (Federal National Mortgage Association or FNMA) was created in 1938.Fannie Mae’s was considered a federal government agency, and its role was to act as a secondary mortgage market that could purchase, hold, or sell loans that were insured by the Federal Housing Administration.Under the Charter Act of 1954, Fannie Mae stopped being a federal government agency and became a private-public corporation.There is a lot of similarity between Fannie Mae and Freddie Mac.
Both are public limited companies that were reserved to serve a public mission.The source of the mortgages they buy is the main difference between the two.Fannie Mae purchases mortgage loans from major retail or commercial banks, whereas Freddie Mac gets its loans from smaller banks, which are called “thrift banks” or “savings and loan associations,” which focus on providing banking services to communities.ConclusionFreddie Mac is a stockholder-owned, government-sponsored enterprise (GSE) to support homeownership for middle-income Americans it was chartered by Congress in 1970.Freddie Mac buys a large number of loans from mortgage lenders, to combine them and sell them as mortgage-backed securities.Federal Home Loan Mortgage Corp. (FHLMC) has an officially recognized nickname as Freddie Mac.
Both Fannie Mae and Freddie Mac are publicly traded GSEs.While Fannie Mae buys mortgage loans from major retail or commercial banks, Freddie Mac obtains its loans from smaller banks that is the only difference between the two.The unchecked growth for Fannie Mae and Freddie Mac was the main reason that led to the credit crisis of 2008 leading to the Great Recession.https://www.compareclosing.com/blog/fhlmc-federal-home-loan-mortgage-corp/
Purchasing your first house is a wonderful experience, but it can also be difficult if you don't know where to begin.Finding the best first home buyers mortgage in Brisbane?
You can get a number of good benefits if you use a first home mortgage broker to buy your first time home.
As a first home buyer, you’ve probably got a lot of questions.
So, to get you started, North Brisbane Home Loans team has created the ‘First Home Buyer Guide’.
