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HOME MORTGAGE DISCLOSURE
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In 2002, Congress passed an amendment to Regulation C or
HMDA. This amendment requires the disclosure of price data for
higher-priced loans, not the disclosure of the majority of prime-rate
loans. According to the Federal
Reserve, only the higher priced loans are reported primarily
due to the increase in technology. Certain higher-priced mortgage
loans are not included in this group, for example, unsecured home
improvement loans and home equity lines of credit.
The purpose of the disclosure is to improve the efficiency and
compliance with consumer protection and anti-discrimination
laws and improve community development. If the inherent limitations
of the new requirements under HMDA are not understood, the result
could reduce competition in certain areas, as well as, limit credit
to the higher-risk borrowers in those areas.
With the discrimination concerns in relation to the HMDA amendment,
the Federal
Reserve does not anticipate the new HMDA reporting guidelines
to show a higher loan rate to minorities than to whites. However,
the Federal Reserve believes if discrimination does become evident,
closer scrutiny will be the result.
Reference
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Cauley & Associates by Email,
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