Which federal law requires originators to use their best judgment in determining demographic information if not voluntarily provided by the borrower?

The correct answer is HMDA, which stands for the Home Mortgage Disclosure Act. This federal law is designed to provide the public and public officials with information that can be used to assess whether financial institutions are serving the housing needs of their communities, and to help identify discriminatory lending patterns.

Under HMDA, if an applicant does not voluntarily provide certain demographic information, such as race, ethnicity, and sex, the loan originator is required to use their best judgment to collect this information. The purpose of this requirement is to ensure that comprehensive data is available for evaluating lending practices and promoting fair housing. This helps in holding lenders accountable and addressing any potential discriminatory practices in mortgage lending.

The other laws listed pertain to different aspects of mortgage regulation. The Community Reinvestment Act (CRA) focuses on encouraging financial institutions to meet the credit needs of the communities in which they operate, particularly low- and moderate-income neighborhoods. The Truth in Lending Act (TILA) aims to promote informed use of consumer credit by requiring disclosures about its terms and costs. The Real Estate Settlement Procedures Act (RESPA) governs the process of real estate transactions, particularly in relation to settlements and the disclosure of costs associated with closing on a property. Each of these laws has its unique focus