Question 39
Domain 1: Federal Mortgage-Related LawsWhat is the primary purpose of HMDA data collection and disclosure?
Correct answer: B
Explanation
HMDA requires lenders to collect and disclose mortgage lending data so regulators and the public can spot patterns that may indicate discrimination. The data also helps assess whether financial institutions are meeting community credit and housing needs.
Why each option is right or wrong
A. To help lenders price loans accurately
B. To identify potential discrimination and assess community lending needs
Under the Home Mortgage Disclosure Act, 12 U.S.C. § 2801 et seq., and its implementing Regulation C, 12 C.F.R. Part 1003, covered lenders must collect and publicly disclose mortgage application and origination data. The disclosure is used by regulators and the public to evaluate lending patterns for possible discriminatory treatment and to assess whether institutions are serving the housing and credit needs of their communities.
C. To provide credit scores to consumers
D. To regulate interest rates on mortgages