CFPB Imposes Largest-Ever HMDA Deficiency Fine on Nonbank Lender

The Consumer Financial Protection Bureau today issued an enforcement action for alleged Home Mortgage Disclosure Act reporting deficiencies by Nationstar Mortgage. Nationstar is the country’s ninth-largest HMDA-reporting institution by total originations. The enforcement order imposes a $1.75 million fine — the largest ever for a CFPB HMDA violation — and requires Nationstar to correct reporting deficiencies by improving its compliance management program and correcting its HMDA submissions from 2012 to 2014.

According to the consent order, as Nationstar grew its HMDA-covered loan portfolio by nearly 900 percent over four years, it had flawed HMDA compliance systems that generated submission sample error rates reaching as high as 33 percent in 2013. The bureau also said that Nationstar did not adequately detail HMDA data collection and validation strategies, define employee roles related to HMDA, conduct compliance audits or tests of HMDA data, guard against data inconsistencies, monitor vendors or implement compliance management tactics to identify these deficiencies.

The enforcement action comes as the industry is preparing to comply with HMDA’s greatly expanded data collection, scheduled to take effect on Jan. 1, 2018. The expanded pool of reportable data raises the stakes for HMDA compliance. Bureau officials have in the past advised financial institutions to read CFPB enforcement actions carefully to understand the bureau’s interpretation of its regulations.