As eluded to last week in a disclosure via a financial report filing, the Consumer Financial Protection Bureau (CFPB) formally announced a penalty against Nationstar Mortgage for violations under the Home Mortgage Disclosure Act (HMDA). The CFPB’s order requires that Nationstar:
- pay a record $1.75 million penalty for the alleged HMDA violations;
- fix HMDA reporting inaccuracies for the three year period from 2012 through 2014; and
- improve its HMDA compliance management system.
In the consent order filed on March 15, 2017, the CFPB noted Nationstar’s history of non-compliance with HMDA reporting requirements, citing a prior consent order against Nationstar from the Commonwealth of Massachusetts in 2011 for HMDA violations. During its HMDA Data Integrity Review, the CFPB identified annual sample error rates ranging from 13 percent to 33 percent over the three year period. These error rates exceeded the threshold for resubmission in each year.
The CFPB’s examination determined that Nationstar’s HMDA compliance program was deficient, noting several inadequacies (CFPB, March 15, 2017):
“(a) not maintaining detailed and centralized HMDA data collection and validation procedures; (b) not clearly and consistently defining, with specificity, employee roles and responsibilities for HMDA data collection and reporting; (c) not performing formal compliance tests, audits, or transaction tests of HMDA data during the Relevant Period; (d) allowing inconsistent data definitions among different lines of business, resulting in data inconsistencies; (e) inadequate ongoing monitoring of vendors related to HMDA; and (f) not implementing adequate compliance management measures to detect and prevent these deficiencies.”
Since the examination, Nationstar has taken actions to improve its HMDA compliance management program, including engaging consultants to correct its inaccuracies for resubmission and investing in new technology and staff.