The Home Mortgage Disclosure Adjustment Act Is a Must-Pass Bill

The Home Mortgage Disclosure Adjustment Act qualifies home lenders to self-certify their compliance with certain guidelines for qualifying for a loan workout. In essence, this hmda lowers the threshold to which a lender must plead to receive the benefits of an adjustment. As a result, there are more loan workout requests from distressed homeowners each year.
Although the purpose of the disclosure adjustment act is to protect homeowners from predatory lending, it has been abused by a select few. The majority of institutions that would be adversely affected by the bill have failed to comply with the reporting requirements. For example, just 10 out of hundreds of banks reviewed by the GAAP guidelines will receive a waiver request. These banks include nursing homes and hospitals. There is a possibility that other institutions could receive the same benefit, but as of now, there has not been enough evidence collected to determine if this is widespread abuse of the law.
However, there are still some legitimate reasons why this information should be made available to the public through: There are several violations of the Act that may have occurred due to failure to make the required disclosures. Some of these could result in the denial of government subsidies and guarantees. Homebuyers could also be subject to unfair practices. In fact, according to the GAAP, lenders were required to perform an analysis to justify the exclusions or limitations on home loans for 30 years before approving the final rules. A report was supposed to be submitted to the Secretary each year to allow for an easy audit of H.R.'s implementation strategy.
But even with all these safeguards, there are still many cases of abuse that take place at the hands of small, medium, and large community banks. A disturbing aspect of the new regulations is the lax compliance standards. According to one GAAP expert, "One significant limitation that is currently being considered in the absence of an effective enforcement mechanism." Because this lack of enforcement has allowed predatory lending to flourish, many community banks have resorted to drastic actions like short sales or conversion of loans to other forms of debt.
This is exactly why the home mortgage disclosure act is a must-pass bill. According to the economists who have studied the issue, such a bill is needed to curb abusive lending practices by lenders and protect the interests of homeowners. The bill should be passed as soon as possible so that it can be enforced immediately. If it is not, we might see more communities where predatory lenders have abused the weak regulatory standards and caused widespread foreclosures, which would again lead to more people losing their homes. For more information, click here:
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