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CFPB Cites Mortgage Servicer for Deceptive Mortgage Loan Reporting

Thu 16 Mar, 2017  /  by McIntyre & Lemon  /   Client Alerts

03/16/17 – The Consumer Financial Protection Bureau (CFPB) takes action against a mortgage servicer for consistently failing to report accurate data about mortgage transactions from 2012 through 2014.

The nationwide nonbank mortgage lender, headquartered in Coppell, Texas, has nearly 3 million customers and is a major participant in the mortgage servicing and origination markets. The company and its subsidiaries earn fees through servicing, origination, and other real estate-based services.

The Home Mortgage Disclosure Act of 1975 (HMDA) requires many mortgage lenders to collect and report data about their mortgage lending to appropriate federal agencies and make it available to the public.

As part of its supervision of larger banks and nonbank mortgage lenders, the CFPB reviews the accuracy of HMDA data and the adequacy of HMDA compliance programs.

According to the CFPB, an investigation determined that the lender’s HMDA compliance systems were faulty and generated mortgage lending data with significant errors. The lender also allegedly failed to maintain detailed HMDA data collection and validation procedures and failed to implement adequate compliance procedures. It also produced discrepancies by failing to consistently define data among its various lines of business.

The lender has a history of HMDA non-compliance dating back to 2011.

The CFPB’s consent order requires the defendant to pay a $1.75 million penalty to the CFPB’s Civil Penalty Fund, develop and implement an effective compliance management system, and fix HMDA reporting inaccuracies.

CFPB Press Release, Consent Order.