January 20th, 2018 9:37 AM by Jackie A. Graves, President
Anti-discrimination lending laws help ensure every mortgage
applicant is treated equally, so mortgage shoppers are often surprised when
they’re completing the loan application process and lenders ask (online,
on paper, or in person) about their ethnicity, race, gender, and age.
don’t ask for this data by mistake. They are required to collect this data by a
federal law called the Home Mortgage Disclosure Act (HMDA). But it’s
understandably confusing in an anti-discriminatory context, so let’s clear it
by Congress in 1975, HMDA requires lenders to collect, report, and disclose
data about mortgages they originate. HMDA was originally enforced by the
Federal Reserve, but rule making and enforcement was transferred to the
Consumer Financial Protection Bureau (CFPB) on July 21, 2011.
HMDA data collected from lenders helps the CFPB and other policymakers to:
CFPB makes regular updates to HMDA rules and reporting procedures,
but the core data they require from lenders includes:
last three items on that list are a standard part of every federally
required mortgage application regardless of whether the application
is filled out by hand, over the phone, or using an online form.
race, ethnicity, and gender questions are in a loan application section called
“Information For Government Monitoring Purposes,” and the disclaimer in this
section reads as follows:
following information is requested by the Federal Government for certain types
of loans related to a dwelling in order to monitor the lender’s compliance with
equal credit opportunity, fair housing and home mortgage disclosure laws. You
are not required to furnish this information but are encouraged to do so. The
law provides that a lender may not discriminate either on the basis of this
information, or on whether you choose to furnish it. If you furnish the
information, please provide both ethnicity and race. For race you may check
more than one designation. If you do not furnish ethnicity, race, or sex, under
Federal regulations, this lender is required to note the information on the
basis of visual observation and surname if you have made this application in
person. If you do not wish to furnish the information, please check the box
below. (Lender must review the above material to ensure that the disclosures
satisfy all requirements to which the lender is subject under applicable state
law for the particular type of loan applied for.)”
covers government monitoring for the three regulatory goals stated above, and
this is why mortgage applications ask for race, ethnicity, gender, and age.
law called the Equal Credit Opportunity Act (ECOA) enacted in 1974 makes it
illegal for lenders to discriminate based on race, national origin, gender,
age, marital status, or because one receives public assistance.
can be confusing because ECOA says lenders can’t use race, ethnicity, and
gender to make loan decisions, but HMDA says lenders must ask for race,
ethnicity, and gender for government monitoring purposes.
discern, it’s all about the lender’s intent, and your perception of their
intent. Was the lender using this data to make a loan decision and thus
violating ECOA, or were they just collecting it for government monitoring
purposes to comply with HMDA?
you are concerned about mortgage discrimination or believe you have been
discriminated against, follow the CFPB’s complaint process, or call
the CFPB at 855-411-2372.
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