|October 18, 2013|
Previously published on October 14, 2013
On October 9th, the CFPB ordered both a bank and nonbank mortgage lender to pay fines for violating the Home Mortgage Disclosure Act (HMDA). The CFPB entered consent orders with Mortgage Master, Inc. and Washington Federal, requiring them to pay to pay civil penalties of $425,000 and $34,000, respectfully, to resubmit corrected HMDA data, and to revise their HMDA compliance systems. 1
As a means of preventing discrimination in lending, HMDA requires financial institutions to collect and to report to regulators certain data about home loan applications and approvals. The Federal Financial Institutions Examination Council annually releases certain HMDA data to the public. The Dodd-Frank Act transferred HMDA rulemaking and enforcement authority to the CFPB.
In announcing the actions, CFPB Director Richard Cordray stated “Today we are sending a strong signal that no mortgage lending institution - whether bank or nonbank - should be able to mislead the public with erroneous data.” The CFPB’s press release further stated that “inaccurate HMDA data impedes the Bureau’s efforts to detect violations of the Equal Credit Opportunity Act...and to stop discrimination in home mortgage lending.”
The Bureau indicated that is has already conducted “dozens” of HMDA reviews at bank and nonbank mortgage lenders, finding largely that they have adequate HMDA compliance management systems and few HMDA reporting errors. Unfortunately, however, the CFPB has not revealed those limited respects in which the compliance systems were inadequate.
1 The Mortgage Master Consent Order and the Washington Federal Consent Order