Question

Which of the following is a primary purpose of HMDA?

A. To prohibit discrimination in all aspects of residential real-estate transactions.
B. To help determine whether financial institutions are serving their communities' housing needs.
C. To ensure financial institutions are meeting a minimum quota of mortgage loans in certain areas.
D. To encourage financial institutions to originate mortgage loans to all applicants, regardless of creditworthiness.

Answer 1

HMDA serves to ensure financial institutions are transparent about their mortgage lending, allowing for scrutiny over fair access to credit and to combat discriminatory practices such as redlining.

Step-by-step explanation:

The primary purpose of the Home Mortgage Disclosure Act (HMDA) is To help determine whether financial institutions are serving their communities' housing needs. This act requires banks and other financial institutions to provide public records of their mortgage lending practices, allowing regulators and consumers to see if lenders are providing fair access to credit across different communities. The HMDA aims to address issues such as redlining and to ensure that banks are not discriminating on the basis of race, sex, and other non-economic characteristics.