October 09, 2013

The Consumer Financial Protection Bureau (CFPB) has ordered Mortgage Master, Inc. and Washington Federal to pay civil penalties for violating the Home Mortgage Disclosure Act (HMDA), which requires certain mortgage lenders to accurately collect and report data about home mortgage loans.

Mortgage Master will pay $425,000 and Washington Federal will pay $34,000 in civil penalties. The CFPB is also releasing a bulletin today that puts mortgage lenders on notice about the importance of submitting correct mortgage loan information under HMDA.

"When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending," said CFPB Director Richard Cordray. "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."

In 1975, Congress passed the Home Mortgage Disclosure Act requiring certain mortgage lenders to make loan information available to the public. Banks, savings associations, credit unions, and mortgage companies must disclose information about home mortgage loan applications, including information about the applications they reject.

The Dodd-Frank Wall Street Reform and Consumer Protection Act transferred HMDA rulemaking authority to the CFPB and made the CFPB a HMDA enforcement agency.

Inaccurate HMDA data impedes the Bureau's efforts to detect violations of the Equal Credit Opportunity Act (ECOA) and to stop discrimination in home mortgage lending. Federal prudential regulators, enforcement agencies, community organizations, and state and local agencies also rely on accurate HMDA data to evaluate a financial institution's compliance with ECOA and other laws, such as the Fair Housing Act and the Community Reinvestment Act.

Enforcing HMDA ensures that lenders that engage in discriminatory lending or that fail to meet the credit needs of the entire community, including low- and moderate-income neighborhoods, cannot hinder regulatory efforts by collecting and submitting erroneous data.

The Bureau reviews the accuracy of HMDA data and assesses compliance programs as part of its supervision of both banks and nonbanks. To date, the Bureau has conducted HMDA reviews at dozens of mortgage lenders, both bank and nonbank, and has found that many lenders have adequate HMDA compliance systems, resulting in HMDA data with no errors or very few errors.