You know those 3 demographic questions you’re expected to answer when you – or your client – applies for a loan?
The questions usually ask about the borrower’s gender, ethnicity, and race.
They have a purpose and you should never leave them blank.
The primary reason you are asked to specify your demographic isn’t because our government is “spying” on us.
When it boils down to it, it’s actually because our government is working to ensure that all communities and groups are treated fairly
These questions exist because of Regulation C, the Home Mortgage Disclosure Act.
Enacted in 1975, the Home Mortgage Disclosure Act (HDMA), or Regulation C, requires financial institutions to report mortgage data for tracking and trending purposes. The law requires certain lenders to collect and report a variety of information they receive on loan applications and on loans they originate. This information includes:
The data reported is used to:
If you’re applying for a mortgage – or helping guide your buyer through the process of getting pre-approved for a home loan – it’s important to know that there is a reason for the endless demographic questions posed on the application.
In short, yours or your client’s answers to these questions are helping ensure lenders, public officials, and communities are meeting housing needs appropriately.
If you’re up for a little light reading, you can browse the HDMA’s latest collected mortgage data and trends at ConsumerFinance.gov.
You can also learn more about Regulation C at Investopedia.
I love helping educate my clients and Realtors on financial wellness and lending legality matters alike! Call me at 480-313-7103 or email me at firstname.lastname@example.org with your questions and to learn about the latest mortgage rates, the mortgage process, and the loan program right for you.