On March 15, 2017, Nationstar Mortgage entered into a consent order with the CFPB to resolve alleged violations of the Home Mortgage Disclosure Act (HMDA). Nationstar will pay a $1.75 million civil money penalty for what the CFPB has termed “persistent and substantial reporting errors” that occurred between 2012 and 2014. According to the Bureau, this is the largest penalty for HMDA violations that the CFPB has imposed to date.
According to the consent order, Nationstar has “a history of HMDA non-compliance” which dates back to November 2011 when Nationstar entered into a consent order with the Massachusetts Division of Banks for violations related to HMDA and Regulation C.
In April 2015, the CFPB conducted a HMDA Data Integrity Review of Nationstar’s 2012, 2013, and 2014 HMDA Loan/Application Register (also known as “HMDA LAR”). The Bureau’s investigation revealed substantial error rates for all three years which indicate the presence of large numbers of errors in excess of the CFPB’s applicable resubmission thresholds. In the samples reviewed, the CFPB found error rates of 13% in 2012, 33% in 2013, and 21% in 2014.
According to the Bureau’s press release, the CFPB also found that Nationstar’s HMDA compliance systems were flawed, and generated mortgage lending data with significant, preventable errors. According to the CFPB, Nationstar’s compliance mechanisms were deficient in a variety of ways, including failing to maintain detailed HMDA data collection and validation procedures, failing to perform formal compliance tests, audits, or transaction tests of HMDA data, and failing to implement adequate compliance procedures to detect and prevent reporting deficiencies.
The consent order requires Nationstar to pay $1.75 million to the CFPB’s civil money penalty fund. In addition, Nationstar must take the appropriate steps to improve its HMDA compliance management system so that it prevents future violations. Finally, Nationstar must review, correct, and make available its corrected HMDA data from 2012-14.
The Bureau’s press release also acknowledged that since the CFPB’s examination, “Nationstar has been taking further steps to improve its HMDA compliance management system and increase the accuracy of its HMDA reporting.”
In a statement released in connection with the settlement announcement, Nationstar explained: “The settlement does not reflect any wrong-doing impacting customers or fair lending; but rather, technical data issues that we have worked tirelessly to resolve through significant investments.”
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