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The Value of HMDA Coverage of Home Lending in Rural Areas and Indian Country

CICD Working Paper 2019-04 | Published July 31, 2019

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The Value of HMDA Coverage of Home Lending in Rural Areas and Indian Country

Abstract

The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board’s Regulation C. This regulation applies to a wide array of financial institutions involved in home lending—such as most banks, savings associations, credit unions, and other mortgage lending institutions—and requires them to annually report data on the applications they receive from borrowers seeking home loan financing (including for mortgage refinancing or home improvement, as well as for home purchase). Due to the breadth and detail of HMDA’s coverage, the HMDA data are viewed as “the most comprehensive source of publicly available information on the U.S. mortgage market.” Bhutta, Laufer, and Ringo (2017). However, HMDA’s coverage is not complete, as many small and nonmetropolitan lenders are exempt from reporting under HMDA. This has led to concerns that the HMDA data are not reliable for monitoring the patterns and trends in rural home lending. The existing evidence on this issue is limited and mixed. We provide new evidence and conclude that, despite significant coverage gaps in some areas, HMDA is a useful and important source of information about rural home lending, including for most of the American Indian reservations in rural areas.