What Is HMDA? Understanding the Home Mortgage Disclosure Act

If you ask ten Compliance Officers what the Home Mortgage Disclosure Act (HMDA) is, you'll probably get one of two answers:

“HMDA is the most powerful fair lending tool in the country,” or
“HMDA is the thing I dread most.”

Truth is, HMDA is a little bit of both. Yes, it’s a powerful tool that helps regulators determine fair lending risk and protect communities from unfair lending practices, but HMDA is also complex and (at times) confusing. For financial institutions that have to report their HMDA data, it’s important to understand what HMDA is, how it affects your institution, and how to prevent HMDA errors.

We’ll get into all of that here. This article covers:

What Is the Home Mortgage Disclosure Act
Why HMDA Matters
Who Has to Report HMDA Data
What Data HMDA Collects
Understanding the HMDA Loan Application Register (LAR)
What Happens if Your HMDA Data is Inaccurate
How to Prevent HMDA Errors

We’ve also created a free HMDA Review Checklist so you can feel more confident submitting your HMDA data.

Download the HMDA Review Checklist

What Is the Home Mortgage Disclosure Act?

The Home Mortgage Disclosure Act, or HMDA (pronounced hum-duh), is a federal law that requires certain lenders (including banks, credit unions, and mortgage companies that meet reporting thresholds) to collect and report their mortgage lending data.

Passed in 1975, HMDA was designed to make mortgage lending patterns visible to regulators, policymakers, community groups, and the public. The law helps identify potential discrimination in lending, evaluate whether institutions are serving the housing needs of their communities, and inform public investment decisions.

HMDA itself is the law passed by Congress, but the reporting requirements are implemented through Regulation C, which is administered by the Consumer Financial Protection Bureau (CFPB). When compliance professionals talk about HMDA requirements, they're often referring to the specific rules outlined in Regulation C.

Why HMDA Matters

To understand why HMDA matters, it’s important to first understand redlining.

The term “redlining” originates from the 1930s, when the Home Owners’ Loan Corporation (HOLC) created literal maps to assess the risk of mortgage lending in different neighborhoods. These maps color coded neighborhoods by risk level: green for “best,” blue for “still desirable,” yellow for “definitely declining,” and red for “hazardous.”

Unfortunately, these “hazardous” areas were defined primarily by race and economic standing. Areas with Black or mixed-race populations were marked in red, effectively cutting them off from homeownership opportunities for generations. These discriminatory practices laid the foundation for the inequalities we still see today.

Because this lending data wasn't collected or reported, it was difficult for regulators, institutions, and policymakers to determine where these patterns existed or how widespread they were.

Congress passed the Home Mortgage Disclosure Act in 1975 to bring transparency to the mortgage market. The idea was simple: if lending data was collected and made available, regulators and communities could better understand who was receiving credit, where loans were being made, and whether certain neighborhoods were being underserved.

At its core, HMDA is a disclosure law, not a lending law. In other words, it doesn’t tell financial institutions who they must lend to or what loans they must approve. Instead, it requires lenders to report their mortgage application and lending data in a consistent format.

Because of HMDA, financial institutions can tell the story behind their mortgage lending activity, and regulators can identify potential redlining. When your financial institution understands your HMDA data, it’s easier to avoid risk and make a difference in your communities.

Check out this article to learn more about redlining.

How HMDA Supports Fair Lending

HMDA data is one of the primary tools regulators use when evaluating fair lending risk. By analyzing loan applications, approvals, denials, pricing information, and borrower demographics, examiners can identify patterns that may indicate potential discrimination or redlining. While HMDA data alone doesn't prove discrimination, it often serves as the starting point for deeper fair lending reviews.

Who Has to Report HMDA Data?

Not every financial institution has to report its HMDA data. But don’t get your hopes up just yet. Most banks, credit unions, and mortgage companies have to report their HMDA data. It’s only the really small institutions or those that don't originate many mortgage loans that are off the hook.

Here are the three primary factors that determine whether your institution must report its HMDA data:

1. The Type of Institution

HMDA applies to a variety of mortgage lenders, including:

Banks
Credit unions
Savings associations
Non-depository mortgage lenders

If you’re reading this article, chances are you work at one of these institutions.

2. Mortgage Lending Volume

An institution must also originate a minimum number of mortgage loans to trigger reporting requirements.

As of 2026, lenders generally must report HMDA data if they originated either:

At least 25 closed-end mortgage loans in each of the two preceding calendar years
At least 200 open-end lines of credit (such as HELOCs) in each of the two preceding calendar years

(Side note: A closed-end mortgage loan has a defined repayment term and payoff date, while an open-end line of credit allows borrowers to draw funds repeatedly up to an approved limit.)

Still in the running? Let’s see if you meet the last requirement…

3. Asset Size

For banks, savings associations, and credit unions, your institution must also meet a minimum asset-size threshold (this one doesn’t apply to non-depository mortgage lenders). This threshold is adjusted annually and, as of 2026, is $59 million in assets. That’s pretty low compared to the size of most lending institutions!

If your institution meets all three of the above criteria, then congratulations, you’re a HMDA reporter! So…what exactly do you need to report?

Here’s a handy chart to help determine whether your institution is a HMDA reporter:

What Data Does HMDA Collect?

If you're imagining a simple spreadsheet with a few loan amounts and addresses, it’s time to burst your bubble.

HMDA reporting has expanded significantly since the law was first passed in 1975. In fact, one of the biggest changes came in 2015 when the CFPB dramatically increased the amount of information institutions must collect and report. The goal was to give regulators and the public a clearer picture of mortgage lending activity. Great for them. Not so great for you…

Something you need to understand is that HMDA doesn't just collect information about approved loans. It captures:

Approved loans
Denied applications
Withdrawn applications
Applications closed for incompleteness
Purchased loans

This is one of the reasons HMDA is such a powerful fair lending tool. Regulators aren't just looking at who received loans; they can also see who applied, who was denied, and where those applications came from.

For each reportable application, you may need to collect and report information such as:

Loan amount
Loan purpose
Property location
Occupancy type
Loan type
Interest rate information
Action taken on the application
Applicant demographic information, including ethnicity, race, and sex

All of this information helps regulators identify lending trends, evaluate whether institutions are serving the housing needs of their communities, and look for potential signs of discriminatory lending practices and redlining.

Of course, all of this information has to be reported somewhere. That's where the Loan Application Register (or LAR) comes in.

Understanding the HMDA Loan Application Register (LAR)

Now that your institution has collected all this mortgage application data, it needs somewhere to go. The Loan Application Register (better known as the LAR) is the file your institution uses to organize and submit its HMDA data.

Think of the LAR as your official HMDA spreadsheet, except with more rules, more fields, and a lot more scrutiny.

Each row in the LAR represents one reportable mortgage application or loan. This may include applications that were approved, denied, withdrawn, closed for incompleteness, or purchased by your institution. For each record, your institution reports required data points such as loan type, loan purpose, property location, loan amount, action taken, and applicant demographics.

The LAR is submitted annually by March 1st through the federal HMDA platform. It then goes through edit checks to identify potential errors or inconsistencies. These checks help ensure the data is accurate before it becomes available for regulatory review and public analysis.

The LAR is the record that regulators, examiners, and outside groups use to understand your institution’s mortgage lending activity. This file tells a story, and it’s important that you make sure it’s the right one.

If your institution doesn’t yet use HMDA management software, it can be difficult to create and format your LAR. While definitely more challenging, you can use spreadsheets to create your LAR until your institution gets an official HMDA software (like Kadince).

What Happens if Your HMDA Data is Inaccurate

If you're hoping nobody will notice a few mistakes in your HMDA data, we have some bad news. This data is highly scrutinized, and somebody will probably notice even small mistakes.

Your HMDA data isn't just reviewed by regulators during an exam. It also becomes publicly available and can be analyzed by government agencies, community groups, researchers, journalists, and anyone else. That's why HMDA accuracy matters so much.

Here are some common HMDA challenges:

Missing demographic information
Geocoding mistakes
Loan classification issues
Annual reporting deadlines

So what happens when you get your HMDA data wrong?

Increased Regulatory Scrutiny

One of the biggest risks of inaccurate HMDA data is that it can draw unwanted attention from regulators. Examiners use HMDA data to evaluate fair lending risk, identify unusual lending patterns, and determine whether additional review is necessary.

Even if a data issue is the result of a simple coding error, inaccurate reporting can make it appear as though your institution has a larger problem than it actually does.

Required Corrective Action

When regulators identify HMDA reporting errors, they may require your institution to:

Correct and resubmit data
Strengthen internal controls
Improve employee training
Conduct additional monitoring and reviews
Implement corrective action plans

While none of these are impossible to overcome, these corrective actions take time and money. Correcting a year’s worth of records is time-consuming (not to mention starts the entire exam process over again). You might need to hire a consultant to fix the data, which takes even more time and money. And that’s time you could be spending strengthening your future HMDA process or making a difference in your community.

Increased Fair Lending Concerns

Because HMDA is heavily used in fair lending analysis, inaccurate data can create misleading conclusions about your lending practices.

For example, incorrect demographic information, loan purpose codes, or application outcomes can distort fair lending analyses and potentially raise questions that otherwise wouldn't exist.

Public Reputation Risks

Unlike many compliance reports that stay behind closed doors, HMDA data is largely public.

If outside groups identify unusual patterns in your data, they may ask questions about your lending practices. Even if the issue stems from reporting errors rather than actual lending behavior, your institution may still have to explain what happened. And that’s not a fun conversation to have.

How to Prevent HMDA Errors

The good news is that most HMDA problems are preventable.

Strong procedures, regular data reviews, employee training, and ongoing monitoring can catch many issues long before your annual submission deadline. The earlier errors are identified, the easier they are to fix.

That's why successful HMDA programs don't treat reporting as a once-a-year project. They treat data quality as a year-round process and have systems in place to catch and correct errors.

One of the easiest ways to prevent HMDA errors is to use software specifically designed to do so. There are lots of different software programs available to HMDA reporters, but a little birdie told us that Kadince is the best…

Kadince is HMDA Management software built to help your institution collect and organize home mortgage data, plus download your LAR file and submit it without the hassle. With Kadince, you can:

Identify missing, inconsistent, or incomplete HMDA fields automatically
Flag exceptions and potential issues before submission deadlines
Centralize your HMDA Loan Application Register in one platform
Filter and analyze HMDA records without rebuilding reports
Track trends and outliers across products, channels, and geographies
Eliminate last-minute scrambling and uncertainty

If your institution is a HMDA reporter (and if you’ve made it this far, we’re pretty sure you are), then software like Kadince will help take your HMDA program to the next level. Schedule a 30-minute demo to see how Kadince’s HMDA Management software can help you prevent errors and save time.

Schedule Demo

Kadince HMDA Software

And don’t forget to download the free HMDA Review Checklist so you can feel more confident submitting your HMDA data.