What is a key requirement of the Home Mortgage Disclosure Act (HMDA)?

The key requirement of the Home Mortgage Disclosure Act (HMDA) is that lenders need to report annually on loan data. This act was established to ensure transparency in mortgage lending and to help identify patterns of discrimination in home mortgage lending practices. By requiring lenders to collect and report specific information regarding their lending activities, such as loan amounts, borrower demographics, and geographic information, regulators and the public can assess whether financial institutions are serving their communities fairly and equitably.

The annual reporting helps to create a comprehensive overview of mortgage lending trends, which can facilitate better policymaking and help identify any potential discriminatory practices. This data is crucial for regulatory agencies, community organizations, and other stakeholders interested in understanding and improving access to mortgage credit.

The other options listed do not accurately describe a key requirement of HMDA in the same pivotal way as the annual reporting does. Providing a Good Faith Estimate is important in the loan process but is not a requirement under HMDA. Disclosing the ethnicity of borrowers is part of the information collected under HMDA, but it is not the primary requirement; HMDA focuses more broadly on the overall annual data reporting. While maintaining records of loan documents is important for compliance and recordkeeping reasons, it is not a specific requirement established by HMDA