CFPB Proposes Stiff Penalty for Mortgage Lender Over Failure to Correct HMDA Violations

The CFPB is seeking a $3.95 million penalty for alleged violations of a 2019 Consent Order concerning the filing of false mortgage data by a Florida-based nonbank mortgage lender.

In the US District Court Southern District of Florida, the CFPB sued the lender for failing to adhere to the terms of the Consent Order which required the lender to, among other things, "comply with the [Home Mortgage Disclosure Act ("HMDA")], and undertake other corrective actions, including developing and improving its HMDA policies and procedures." (Without admitting or denying any of the findings of fact or conclusions of law, the lender stipulated in the Consent Order to CFPB findings that it intentionally reported inaccurate race, ethnicity and sex information.)

In the District Court, the CFPB alleged that that the lender violated the Consent Order and continues to have "pervasive deficiencies in its policies, procedures and systems to collect and report HMDA data and because, despite knowing its systems were faulty, it failed to implement adequate changes to its HMDA compliance management system to ensure the accuracy of its HMDA data." Further, the CFPB alleged that the lender continues to submit error filled HMDA data.

In a proposed Stipulated Final Judgment and Order, the lender would be required to (i) "[d]evelop, implement and maintain policies, procedures and controls to prevent and detect errors in HMDA Data;" (ii) "[r]ecord and maintain consumer and loan data;" (iii) develop "operating policies and training procedures" for employees who deal with "HMDA data directly or indirectly;" (iv) "establish a HMDA Compliance Subcommittee;" (v) "retain a qualified third-party independent auditor;" (vii) "create and implement a comprehensive compliance plan;" and (vii) pay a $3.95 million civil money penalty.