Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What does the Home Mortgage Disclosure Act require lenders to disclose?

1. Lending information

2. Credit reports

3. Income verification

4. Personal identification information

The correct answer is: Lending information

The Home Mortgage Disclosure Act (HMDA) requires lenders to disclose specific lending information to promote transparency and help identify potential discriminatory lending patterns. This act mandates that lenders compile and report data regarding the types of loans they provide, the demographics of applicants, and their geographic distribution. The goal is to ensure that the lending practices of financial institutions are fair and equitable, fostering an environment where discrimination in mortgage lending can potentially be monitored and addressed. The focus on lending information encompasses various details, including the number of loans originated, the reasons for loan denials, and the types of loans that are granted. By requiring this data to be disclosed, the HMDA serves to protect consumers, provide regulators with critical information to oversee the lending industry, and enhance the public's understanding of lending patterns. In contrast, the other options pertain to different facets of the lending process. Credit reports, income verification, and personal identification information are more related to the underwriting process and the evaluation of individual borrower risk rather than the broad systemic analysis that the HMDA aims to address through the collection of lending information.