10/14/2016

Mortgage Application Ethnicity HMDA Laws




 Frank Lloyd Wright house images by Caroline Gerardo


The Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) prohibit a lender from discriminating against an applicant on the basis of national origin, race, color, sex and other prohibited bases. The Home Mortgage Disclosure Act (HMDA) requires a lender to publicly disclose data on mortgage loans.

These non-discrimination laws require a lender to collect and report a variety of data related to the applicant and the property to be secured.

Key Point
In particular, a lender is required to collect and report information on an applicant’s ethnicity, race and sex. This is known as the “Government Monitoring Information”.
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A lender must collect and report on an applicant’s:
Ethnicity as either:
  • Hispanic or Latino
  • Not Hispanic or Latino
Race as:
  • American Indian or Alaska Native
  • Asian
  • Black or African American
  • Native Hawaiian or Other Pacific Islander
  • White

  • Key points to remember about the requirements:
    • “Hispanic” is not a category under Race. It is considered under Ethnicity as “Hispanic or Latino”
    • “Other is not an option under the Race category
    • More than one category under Race may be selected
    A lender must collect and report each applicant’s Sex as either:
    • Female
    • Male
    • Thus, on any application taken for a purchase-money, refinancing or home-improvement loan secured by a dwelling a lender must collect and report the Government Monitoring Information.
      The Government Monitoring Information must be collected separately in a form, or as part of a Loan Application form (such as Freddie Mac Form 65 or Fannie Mae Form 1003).
    • With regard to Government Monitoring Information requirements, which of the following are true? Please check all that apply, answers are highlighted in green

      Information on an applicant’s “Ethnicity” is a requirement
      “Hispanic” is a category under Race
      You are able to note applicant’s “Race” under more than one designation
      Noting applicant’s “Sex” is optional
      A lender must collect and report the Government Monitoring Information on any credit card application
      “Other” is not a designation under the “Race” category

      How the application was taken (i.e. face-to-face, telephone, etc.) must be noted

      On mail or Internet applications, a lender must provide the new Government Monitoring Information form or a similar form and attempt to collect the information from the applicant. If the applicant chooses not to provide information on ethnicity, race and sex:

      1. The applicant must check the box:
        "I do not wish to furnish this information"
      2. The lender has no further responsibility to collect the information and need not complete the information on the applicant’s ethnicity, race and sex
        With regard to Government Monitoring Information requirements, which of the following are true? Please check all that apply, answers in green
        On all applications, the lender is responsible for completing the information based on visual observation or surname
        On a telephone application, the lender must orally provide a disclosure and request information on ethnicity, race and sex
        On a telephone application if the applicant chooses not to provide the information, the lender must complete it based on surname
        On mail or Internet applications, the lender need not request the information
        On a face-to-face application, if the applicant chooses not to provide the information, the lender must complete it based on visual observation or surname
        On all applications, requesting and collecting information on “Ethnicity” is optional
        On all applications, the lender must request and attempt to collect information on both “Ethnicity” and “Race”