48 Pages Posted: 17 Jun 2010 Last revised: 3 Aug 2010
Date Written: June 17, 2010
This article examines the history of the Home Mortgage Disclosure Act (HMDA) and makes proposals for improving it to help prevent another economic crisis. Passed in 1975, HMDA requires most lenders to disclose information about their home mortgage loans, including the number of home mortgage applications it received; the purpose of each application; the type of loan; the decision on the application; the race, gender, and income of the loan applicant/borrower; the location of the loan and the median income and racial composition of the neighborhood; and the interest rate on the loan. HMDA was originally conceived of as a tool to detect and prevent redlining. It was later expanded to cover lending discrimination and reverse redlining. However, Congress and the Federal Reserve have not required lenders to disclose enough information to permit HMDA to do its job. The pending financial reform legislation would expand HMDA's mission to detect and prevent predatory lending, but once again, the legislation does not require lenders to disclose sufficient information to accomplish its goal. The article proposes several types of information that should be added to the legislation, including, most importantly, the applicant's housing debt/income ratio and overall debt/income ratio.
Keywords: Home Mortgage Disclosure Act, Subprime Lending, Economic crisis
Suggested Citation: Suggested Citation
Marsico, Richard D., Looking Back and Looking Ahead as the Home Mortgage Disclosure Act Turns Thirty-Five: The Role of Public Disclosure of Lending Data in a Time of Financial Crisis (June 17, 2010). Review of Banking and Financial Law, Vol. 29, No. 205, 2009-2010; NYLS Legal Studies Research Paper No. 09/10 #38. Available at SSRN: https://ssrn.com/abstract=1626410