CFPB Levies HMDA Penalty Against Nationstar Mortgage for HMDA Violations

The Consumer Financial Protection Bureau (CFPB) recently ordered Nationstar Mortgage, a national nonbank mortgage lender, to pay a $1.75 million penalty for HMDA reporting errors.  This is the largest HMDA civil penalty imposed by the Bureau to date, and the action stems from Nationstar’s repeated and substantial reporting errors due to its flawed HMDA compliance system.

On three separate data reviews over a three-year period, the Bureau found error rates exceeding the applicable resubmission threshold of 10%.  Additionally, multiple deficiencies in Nationstar’s compliance mechanisms were found, including:

  • Lack of centralized HMDA data collection and validation procedures;
  • Failing to clearly define employees’ roles and responsibilities for HMDA data collection and reporting;
  • Not performing formal compliance tests, audits, or transaction tests of HMDA data;
  • Allowing inconsistent data definitions among different business lines;
  • Inadequate vendor monitoring; and
  • Not implementing adequate compliance management measures to detect and prevent these deficiencies.

This enforcement action stems from data collected and reported from 2012-2014, but it is important to keep in mind that when the new HMDA rule becomes effective next year, credit unions will be required to collect and report significantly more data points than under the current rule.  Now is the time to start ensuring that your internal HMDA compliance management system is accurate and effective, and that your vendors are getting up to speed as well.  The Nationstar action shows that this is a hot topic on the CFPB’s radar, and in this new administration they seem to be focusing on enforcement rather than rulemaking, at least for the time being.   You can view the full text of the consent order here.  Additionally, please refer to CUNA’s HMDA Final Rule Analysis and the HMDA section of the E-guide for more information on the rule.

Source: CFPB and CUNA Blog

Compliance Question of the Week

Who is the member/customer when an account is opened by an individual who as power-of-attorney (POA)?

It depends.  A FAQ released by FinCEN regarding CIP sheds some light on this issue:

The CIP rule provides that a “customer” generally is “a person that opens a new account.” 31 C.F.R. § 1020.100(c)(1)(i). When an account is opened by an individual who has power-of-attorney for a competent person, the individual with a power-of-attorney is merely an agent acting on behalf of the person that opens the account. Therefore, the “customer” will be the named owner of the account rather than the individual with a power-of-attorney over the account. By contrast, an individual with power-of-attorney will be the “customer” if the account is opened for a person who lacks legal capacity. 31 C.F.R. § 1020.100(c)(1)(ii)(A).

Related Links:

31 CFR 1010.100(c)

31 CFR 1020.220

FinCEN Guidance on Customer Identification Regulations

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA announced that its webinar and question and answers from the recent Field-of-Membership webinar are now available.

The NCUA announced that member agencies of the FFIEC issued a joint report to Congress that details their review of regulations affecting financial institutions.


Consumer Financial Protection Bureau (CFPB)

The CFPB announced that it is proposing changes to Regulation B to help mortgage lenders with the collection of consumer demographic information.


Federal Reserve Board (FRB)

The FRB released the March 2017 Senior Credit Office Opinion Survey.

The Philadelphia FRB announced the release of its working paper, How Data Breaches Affect Consumer Credit, which explored how data breaches and news coverage about them impacted consumer interaction with the credit market.

The FRB announced that the U.S. Currency Education Program has designed new materials to help consumers become familiar with security and design features of Federal Reserve Notes.


Federal Deposit Insurance Corporation (FDIC)

The FDIC, jointly with the FRB, announced the completion of their 2015 evaluation of the resolution plans of 16 domestic banks and issued guidance to four foreign banks.

The FDIC announced that its Advisory Committee on Community Banking will meet on Tuesday, March 28, 2017 to provide updates on the FDIC’s Community Banking Initiative.


Federal Trade Commission (FTC)

The FTC delivered a prepared statement to the Senate on its efforts to combat fraud.


Office of the Comptroller of the Currency (OCC)

The OCC released its fourth quarter 2015 mortgage metrics report, which showed that 94.7% of mortgages included in the report were current and performing.


Federal Housing Finance Agency (FHFA)

The FHFA released its 2016 fourth quarter Foreclosure Prevention Report. The report shows that Fannie and Freddie completed over 45,000 foreclosure prevention actions during the fourth quarter.


Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of March 27, 2017. The last update prior to this was March 17, 2017.

Posted in Compliance News.