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CFPB Just Issued their Largest-Ever HMDA Fine

author Trey Sullivan
3 min read
Mar 16, 2017

The CFPB just issued a $1.75M fine for HMDA reporting issues, their largest-ever for this kind of violation. In this post, you'll learn more about the fine and how to improve your HMDA compliance.

Just yesterday, the Consumer Financial Protection Bureau (CFPB) announced that it is fining Nationstar Mortgage, one of the largest mortgage lenders in the nation, $1.75 million for HMDA alleged reporting violations.

This comes just weeks after the HMDA filing deadline on March 1, and amidst a collective industry focus on HMDA and Fair Lending compliance.

According the the CFPB, Nationstar has a history of HMDA data issues dating back to around 2011. The error rate was 13 percent, 33 percent and 21 percent in 2012, 2013 and 2014 respectively.

Related: What Is A Compliance Management System And Why Your FI Needs One

“Nationstar understands how accurate HMDA data is critical to Fair Lending, and we regret the mistakes that led to the reporting errors," Nationstar said in a press statement. "These data issues are not reflective of our customer and compliance-driven business practices, and we remain committed to treating every applicant fairly and responsibly.”

Both Nationstar and the CFPB note that Nationstar is taking steps to improve its HMDA compliance management system and increase the accuracy of its HMDA reporting. Additionally, the company expressed that they have proactively made substantial investments in new staff, training and technology to enhance HMDA-related processes and controls. Nationstar said that they provided the CFPB with frequent updates regarding these improvements to show that leadership takes regulatory compliance seriously.

"Today we are sending a strong reminder that HMDA serves an important purpose...and those required to report this information must make more careful efforts to follow the law," said Richard Cordray, Director of the CFPB.

HMDA stands for the Home Mortgage Disclosure Act, and is one of the key regulations for Fair Lending compliance. HMDA, enacted in 1975, requires that financial institutions collect, submit, report on and make public data related to home purchase, improvement and refinance lending.

[Read Also: See Why the Public HMDA Data Impacts Your Fair Lending Compliance]

One of the requirements of HMDA is that financial institutions submit their clean and accurate data to the regulators for Fair Lending analysis in March. The regulators will then use this data to analyze institutions' Fair Lending performance, identify potential discrimination and even prioritize institutions for exams.

HMDA data is a foundation of Fair Lending compliance evaluation and enforcement for them. As such, the data needs to be accurate and ready to review. That's at least part of the reason why the regulators see HMDA data as so important.

"Financial institutions that violate the law repeatedly and substantially are not making serious enough efforts to report accurate information," said CFPB Director Richard Cordray in a recent post. "Today we are sending a strong reminder that HMDA serves important purposes for many stakeholders in the mortgage market, and those required to report this information must make more careful efforts to follow the law."

The Bureau reported that Nationstar was the ninth-largest HMDA reporter by total mortgage originations, the sixth largest by applications received, and the 13th largest by money lent, according to 2010 HMDA data. They also reported that Nationstar’s HMDA mortgage loan volume increased by approximately 900 percent from 2010 to 2014.

In addition to the fine, Nationstar will be required to:

  • Develop and implement an effective compliance management system: Nationstar will assess and undertake any necessary improvements to its HMDA compliance management system to prevent future violations.
  • Fix HMDA reporting inaccuracies: Nationstar must review, correct, and make available its corrected HMDA data from 2012–14.

Nationstar is expressing a real commitment to improve its HMDA and Fair Lending compliance.

“Moving forward, Nationstar will continue to foster a culture of compliance, ethics and innovation. As we continue on our journey to reinvent the mortgage experience and keep the dream of homeownership alive, nothing is more important than maintaining our customers’ confidence and trust.”

Ncontracts Viewpoint: As financial institutions around the country work to improve their Fair Lending compliance, analyze their HMDA data and prepare for HMDA Plus, you may be looking for resources to help you improve. Ncontracts is here to help you navigate your Fair Lending and HMDA compliance challenges with ease.

Related: Regulatory Update for March 2023: Final 1071 Rule, SVB's Failure, and Junk Fees

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