Which Institutions are Not Subject to HMDA Coverage?
Question
Which of the following institutions is NOT subject to the coverage of HMDA?
" Bank A, with assets of $55 million and located in a large urban city, makes home improvement loans and some home purchase loans to existing customers, but no mortgage loans.
" Bank B, with assets of $9 million and located in a rural area, has several branches, also in rural areas, including one that makes home improvement and home purchase loans.
" Mortgage Company C, with assets of $75 million and a home office in a large East Coast city, makes exclusively home purchase loans.
Answers
Explanations
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A. B. C. D.C
The Home Mortgage Disclosure Act (HMDA) is a federal law that requires certain financial institutions to collect and report data about their mortgage lending activities. The purpose of HMDA is to help identify possible discriminatory lending practices and ensure that lenders are meeting the housing needs of their communities.
To determine which institution is not subject to the coverage of HMDA, we need to understand which types of institutions are required to report HMDA data. Generally, HMDA applies to financial institutions that meet the following criteria:
- The institution is federally insured or regulated by a federal agency.
- The institution originates at least one home purchase loan or refinancing of a home purchase loan in a calendar year.
- The institution's total assets exceed a certain threshold.
Based on these criteria, we can analyze each institution in the question and determine which one is not subject to the coverage of HMDA.
Bank A has assets of $55 million and is located in a large urban city. Although the bank does not make mortgage loans, it does make home improvement loans and some home purchase loans to existing customers. Since Bank A is federally insured and has assets over the threshold, it is subject to the coverage of HMDA. Therefore, option B is incorrect.
Bank B has assets of $9 million and is located in a rural area with several branches, including one that makes home improvement and home purchase loans. Although Bank B does not make mortgage loans, it meets the other criteria for coverage under HMDA, namely that it is federally insured and has assets over the threshold. Therefore, option C is incorrect.
Mortgage Company C has assets of $75 million and exclusively makes home purchase loans. Since Mortgage Company C is federally insured and has assets over the threshold, it is also subject to the coverage of HMDA. Therefore, option D is incorrect.
Therefore, the correct answer is option A, which states that all the institutions are subject to HMDA.
