What is one key requirement of the Home Mortgage Disclosure Act (HMDA)?

The Home Mortgage Disclosure Act (HMDA) was enacted to promote transparency in the mortgage lending process and ensure that lenders serve the housing needs of their communities. A key requirement of HMDA is the collection of demographic information about mortgage applicants, specifically regarding race, ethnicity, gender, and income. This data helps regulatory agencies assess whether lenders are serving the housing needs of all segments of the population and can identify possible discriminatory lending practices.

This requirement is essential as it allows for regulatory oversight and helps to ensure equitable access to mortgage loans. By gathering this data, HMDA helps to highlight disparities in lending practices and fosters accountability among lenders to provide fair treatment to all applicants.

The other options are not accurate representations of HMDA's requirements. Tracking mortgage defaults is much too narrow and does not reflect the broader scope of the act. Reporting data only to mortgage brokers does not align with the HMDA’s objective, which is to ensure transparency in lending practices with a variety of stakeholders, including regulatory bodies. Lastly, while financial documentation is indeed a part of the overall mortgage application process, HMDA specifically focuses on the collection of demographic data and does not obligate borrowers to provide extensive financial documents as a core requirement.