How the Home Mortgage Disclosure Act Helps Bad Credit Borrowers

By Gabriel Traverso
Mortgage Credit Problems Columnist

Bad credit borrowers have enough to worry about when applying for a home loan. The Home Mortgage Disclosure Act (HMDA) is designed to help you as you shop for a bad credit mortgage that fits your needs.

What is Home Mortgage Disclosure Act?

The Home Mortgage Disclosure Act was established in 1975 and requires that all financial institutions maintain and annually disclose data about home purchases, mortgage pre-approvals, and mortgage refinance applications. In part, the Home Mortgage Disclosure Act was created in part to:

Determine that lenders are serving the housing needs of their community
Identify where and if there are discriminatory lending practices

Since this act was designed to regulate mortgage lenders and protect homebuyers, it's critical that as you shop for a bad credit home loan you deal with mortgage lenders covered by the Home Mortgage Disclosure Act.

How does the Home Mortgage Disclosure Act Protect Bad Credit Borrowers?

The HMDA helps the federal government identify financial institutions that use discriminatory lending practices. When you apply for your bad credit home loan the HMDA has already helped you by ensuring your mortgage lender has not turned down previous mortgage applications based on race or gender. HMDA will help determine if the lender have been writing too many high interest home loans as well.

Bad Credit Mortgages: Do Your Homework

Although the Home Mortgage Disclosure Act is there to help bad credit mortgage shoppers like you, it is your responsibility to research your mortgage lender as well as the type of bad credit home loan for which you are applying. That means most lending institutions with assets over $33 million are required to report HMDA data. Ask plenty of questions about your home loan--and take notes. Compare loan offers with different lenders and take your time about it. By doing your mortgage homework you should be able to find a bad credit home loan that helps you achieve your goal of homeownership and fits your budget.

Source
FDIC

About the Author
Gabriel Traverso is a free-lance writer, professional musician and artist. He resides with his family in Reno, NV.

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