The Consumer Financial Protection Bureau fined two institutions a combined total of $459,000 in civil penalties for violating the Home Mortgage Disclosure Act (HMDA).
According to a CFPB press release, both Washington Federal, a bank headquartered in Seattle, Wash., and Mortgage Master, a nonbank headquartered in Walpole, Mass., had “significant errors” in data reported for 2011. They were fined $34,000 and $425,000 respectively.
In conjunction with these consent orders, the CFPB also issued a bulletin detailing how it reacts to HMDA inaccuracies. When examiners find a certain percentage of errors in a sample, the entries must be corrected and resubmitted. The precise percentage depends on the number of HMDA Loan Application Register entries; exact error thresholds can be found in the CFPB’s HMDA Resubmission Schedule and Guidelines.
Beyond requiring correction and resubmission of inaccurate data, the CFPB might pursue a public enforcement action, as it did in the case of Washington Federal and Mortgage Master. Factors which might prompt a public enforcement action include the size of mortgage lending activity, error rate, history of HMDA supervisory activity, and whether or not errors were self-identified or self-corrected.
Washington Federal submitted data on 5,785 applications for 2011 while Mortgage Master submitted data on 21,015 mortgage loan applications.
Both Washington Federal and Mortgage Master are required to correct and resubmit its 2011 HMDA data, pay a fine and implement a HMDA compliance management system.
In its press release, the Bureau emphasized the importance of accurate information to prevent discrimination in home mortgage lending. Director Richard Cordray said that inaccurate information “obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending.”