FAQ – HMDA: Demographic Information

January 18, 2024 BY MQMR Blogger

Question: Does a mortgage lender need to monitor their employees to ensure accurate HMDA data collection and reporting of demographic information (race, ethnicity, and sex)?




YES! The regulatory requirement for lenders to collect demographic information dates back to 1977 and is used by regulators to help detect mortgage lending discrimination. The Consumer Financial Protection Bureau (CFPB) and other federal regulators stress the importance of collecting accurate data for this reason. Often mortgage lenders rely upon their employees to collect this data, but this is something which can result in severe monetary penalties for a mortgage lender.


For example, in a recent Consent Order with Bank of America, the CFPB imposed a fine of $12 million. The CFPB found that hundreds of Bank of America loan officers failed to ask mortgage applicants certain demographic questions as required under federal law, and then falsely reported that the applicants had chosen not to respond. The CFPB indicated Bank of America failed to adequately oversee its mortgage loan officers in regard to collection of this data, which resulted in inaccurate and false reports.  

Unfortunately, this is a common theme in the mortgage industry. Mortgage lenders must train their mortgage loan originators regarding the responsibility to request and collect demographic information from applicants. For online applications, mortgage lenders must ensure their systems properly request and record this information as well. Mortgage lenders must also review and audit the data collected to make sure it is accurate. High percentages of “I do not wish to provide this information” from a particular mortgage loan originator may be a sign to a mortgage lender (and regulators) of inaccurate reporting and requires further investigation.

Appendix B to Part 1003 – Form and Instructions for Data Collection on Ethnicity , Race, and Sex is a useful tool for lenders. It provides a sample data collection form and explains how to report demographic information based on the applicant’s responses and method of application.