The Home Mortgage Disclosure Act (HMDA) requires many financial institutions to maintain, report, and publicly disclose loan-level information about mortgages. This data helps show whether lenders are serving the housing needs of their communities; they give public officials information that helps them make decisions and policies; and they shed light on lending patterns that could be discriminatory. The public data are modified to protect applicant and borrower privacy.
HMDA was originally enacted by Congress in 1975 and is implemented by Regulation C.
Each year, millions of people apply for mortgages. Using HMDA data, we can learn what happened to the vast majority of those applications and compare that to previous years. If you want a summary, check out the Bureau’s annual Data Point articles and accompanying tables.
Brokers are third-party professionals or firms that connect buyers and lenders, so they have access to a wider array of lending options than a loan officer with an individual financial institution. Operating as middlemen, brokers don’t underwrite mortgage loans directly. Their compensation usually comes from lenders on a commission or fee basis.
The Nationwide Mortgage Licensing System & Registry has a searchable online database where you can find a broker and verify that he or she is licensed. The NMLS also has a tool where you can search your state’s regulatory agency to make sure there are no disciplinary actions against that broker.
If you’re shopping for a conventional, FHA, VA, USDA mortgage, brokers can still save you thousands of dollars compared with individual financial institutions. If you have an unusual or complicated financial situation, many conventional financial institutions may not offer solutions and a broker might be able to find a more specialized option for you.
You may have heard about using a broker for your next home search. As the concept would be expounded upon at the recent Fuse conference, the fifth iteration of an annual gathering that took place in Las Vegas from Sept. 29-Oct. 1. AIME’s CEO waxed eloquently on the idea in a keynotes address, and a track was devoted to the subject as well. The name of the track: “Why Brokers Are Better.” Of course.
Panelists included Tyler Hodgson, founder, and president of NXT Mortgage Co.; Karis Koehn vice president of partnerships at AIME (who served as moderator); and Willie Newman, CEO, and president of Home Point Financial.
Central to the discussion was Home Mortgage Disclosure Act data from the Modified Loan Application Register covering some 4,316 filers. The published data contain loan level information filed by financial institutions, modified to protect consumer privacy – the latest iteration of which was released in March. The upshot: Figures show the average consumer saves an average of $9,400 going through a broker in wholesale versus retail – up to $10,400 for minorities. The findings have become something of a vindication for the broker channel ever since AIME crunched the numbers to show consumer gains.
Newman said, “We were looking for information that would validate, and it was the best decision. What we discovered is that HMDA data is apples to apples in comparing wholesale to retail. We proved empirically that every year into 2021 that brokers were better for consumers to the tune of $9,400 per loan. It was validating. Brokers are the obvious choice.”
Consider meeting two different Loan Officers from two different financial institutions, a broker, and a retail lender. Each provides access to financing options. Newman recreated the consumer’s trek toward buying a home in arguing for the broker channel. The first one says ‘great, I can help you with that service and find you the best possible deal among five suppliers.’ You go to the second provider and that person says: ‘I only have one that I provide, and here’s the cost associated with it.’ As a consumer, what do you think?
An open and honest discussion is all that is needed to get started.