Why did Congress enact the Home Mortgage Disclosure Act?

Congress enacted the Home Mortgage Disclosure Act (HMDA) primarily to help identify patterns of discriminatory lending. The law was established in 1975 to require financial institutions to collect and report data on mortgage applications. This includes information about the race, ethnicity, and sex of applicants, as well as the geographic distribution of loans.

By mandating such disclosures, the HMDA seeks to uncover disparities in lending practices that may indicate discrimination against certain groups. The collected data allows for heightened scrutiny of lending patterns, enabling regulators and the public to analyze whether individuals from specific demographics or areas are being unfairly denied access to mortgage loans. This contributes to greater transparency in the housing market and promotes equitable lending practices, which is essential for addressing disparities and ensuring fair access to home financing options for all borrowers.

The other options, while related to the broader context of real estate and lending, do not encapsulate the primary purpose of the HMDA. The act is not focused on maintaining home value consistency, providing lenders with tools for interest rate setting, or creating a real estate values repository. Instead, it is specifically aimed at revealing and addressing discriminatory lending practices.