HDMA Flashcards
Home Mortgage Disclosure Act
What is the main focus of HMDA?
A. Requires lenders to report data and to reduce housing discrimination.
B. Requires lenders to touch base with the Federal government once a year.
C. The extensive How to be a Lender guide in the USA.
D. A mandate of lenders elects their own professional president for
government affairs.
Correct answer: A
A is correct because the primary aim of the HMDA is to protect consumers from housing lenders, which includes a specified list of what counts as discrimination. In order to combat this, lenders must list all mortgage applications on a loan application register (LAR) and provide specific information about the applicate and why it was declined if applicable.
When did HMDA pass into law?
A. 1988.
B. 2008.
C. 1940.
D. 1975.
Correct answer: D
D is correct, as HMDA was signed into law by Congress on the 31st of
December 1975, becoming official the following year. It was enacted to
give information to aid in combating housing discrimination.
What must lenders report as part of the HDMA on LAR?
A. Law improvement ideas.
B. Their daily affairs to better regulate the industry.
C. Consumer details related to gender, race, and ethnicity.
D. The names and addresses of consumers.
E. Reasons for applications declined.
F. C & E.
Correct answer: F
F is correct because LAR is an official register that records every mortgage application with specific information about the applicant and why they have been declined for a mortgage. Information related to gender, race, and ethnicity is essential as these could shed light on possible discrimination in the lender’s judgment.
What is the HMDA rule 2015?
A. An amendment to consumer details from the previous law.
B. Some financial institutions must report data on certain dwelling-secured, open-ended lines of credit, such as home-equity lines.
C. A reversal of rule 2012 required lenders to include the names and
addresses of applicants as part of LAR.
D. The LAR register was made public for the first time.
Correct answer: B
B is correct, as the HMDA rule 2015 amended the former Regulation C
rule, which didn’t require reporting home-equity lines of credit. The
amended law required this application type to be reported like other mortgage applications.
How do lenders submit financial data as part of HMDA?
A. It is submitted to the state governor, who will check HMDA compliance.
B. The Home Mortgage Disclosure Act’s official website.
C. HMDA collects business records every year in person on the 1st of July.
D. A detailed email to the Home Mortgage Disclosure Act.
Correct answer: B
B is correct because there is no official way to submit application reports. The Home Mortgage Disclosure Act’s website is set up to help you work through the whole process to ensure you keep correct records and submit them to the right place at https://ffiec.cfpb.gov./
What types of applications must financial institutions disclose to
HMDA?
A. Mortgage loans.
B. Home improvement loans.
C. Refinancing.
D. All of the above.
Correct answer: D
D is correct, as HMDA requires the declaration of all mortgage loans, home improvement loans, and refinancing applications. These also include the details of why the application was declined and specific details about the applicants.
Do you declare withdrawn loans through HMDA?
A. Yes
B. No
Correct answer: A
A is the correct answer because under the 2018 HMDA amendment,
withdrawn and incomplete loan applications should be declared as part of LAR.
What types of applications do you not need to disclose to HMDA?
A. Open-end line credit
B. Family holiday home loan.
C. Close-end mortgage loan.
D. A & C.
Correct answer: D
D is correct because HMDA doesn’t require several types of applications to be disclosed to LAR. These include open-end line credit, close-end mortgage loans, and transactions unrelated to a loan. B is incorrect, as a family holiday home loan would require it to be reported to the HMDA.
What happens if you don’t report information to HMDA?
A. A civil money penalty based on severity.
B. A warning and a chance to submit before harsher penalties.
C. Prison time.
D. All of the above
Correct answer: D
D is correct, as although the punishments for failing to follow the HMDA rarely end in prison time, it is not something to be taken lightly. If you fail to follow good HMDA policy, you will be fined based on the percentage of non-compliance, followed by a warning and a chance to fix your poor data before resubmission. You won’t just be losing money by the hefty fine, but
the hours to fix the data
What is the definition of a closed-end mortgage loan?
A. A mortgage loan that is final and cannot be renegotiated, prepaid, or
refinanced.
B. A mortgage loan that is flexible with date or repayments and can be reborrowed.
C. A mortgage loan with a fixed interest rate.
D. A mortgage loan with an unfixed interest rate.
Correct answer: A
A is correct because closed-end mortgage loans are a restricted type of loan that can’t be renegotiated, prepaid, or refinanced without paying extra lender fees or other penalties. These are the types of home loan applications declared in LAR. B is incorrect, as this is the definition of an open-ended
mortgage loan, and C & D are just types of interest rate agreements.
What is NOT an example of HMDA non-compliance?
A. A lender that doesn’t collect reports or discloses data.
B. A lender that collects, reports, and discloses mortgage data.
C. A lender that denies loans or credit to applicants of certain
neighborhoods.
D. A failure to submit HMDA data.
Correct answer: B
B is correct, as this is a great example of a lender working under HMDA regulations by collecting data on their mortgage activities, creating reports and then disclosing it clearly to HMDA regulators. A is a common HMDA non-compliance as it is the opposite of B, where the lender doesn’t keep records, collect data or create reports, and thus doesn’t disclose any of this important to the HMDA regulators. C is a classic redlining practice which is outlawed under HMDA and other lending anti-discrimination laws where the lender refuses a loan based on applicant race or location. And D is like A where the lender has failed to submit any HMDA data full stop.
What is an example of HMDA non-compliance?
A. Mortgage data disclosed to the public.
B. Lenders providing accurate and complete data.
C. Borrowers from a poor side of town being denied a loan.
D. Regulated mortgage practices.
Correct answer: C
C is correct, as HMDA outlaws redlining where a loan is denied because the
applicant is from a certain part of town or their race. A is a great example of HMDA compliance as part of their policy to collect mortgage data is also to disclose it to the public so that lenders operate more openly with their
customers as well as each other. This in terns helps regulate the mortgage industry as shown in D. B, describes the role of lenders under HMDA, which requires that they keep accurate and complete data of their mortgage lending practices. Failure to provide correct
information can affect the
integrity of the whole system.
