Final answer:
The Home Mortgage Disclosure Act was enacted by Congress to help identify and prevent discriminatory lending practices by requiring financial institutions to disclose data about home loans, assisting in monitoring for fair access to credit.
Step-by-step explanation:
Congress enacted the Home Mortgage Disclosure Act (HMDA) primarily to help identify patterns of discriminatory lending and ensure fair access to credit. The act requires financial institutions to maintain and annually disclose data about home purchases, home purchase pre-approvals, home improvement, and refinance applications. The information helps show whether banks are serving the housing needs of their communities and provides public officials with information to make investment decisions.
Over the years, consumer protection laws have defined clear regulations that banks must adhere to, such as the prohibition of discrimination on the basis of age, race, sex, or marital status. By collecting information on the race, sex, and geographical distribution of loan applicants, the government can monitor a lender's compliance with equal credit opportunity, fair housing, and home mortgage disclosure laws.