CFPB Fines Mortgage Master, Washington Federal For HMDA Violations

The Consumer Financial Protection Bureau (CFPB) has ordered two lenders to pay civil penalties over alleged violations of the Home Mortgage Disclosure Act (HMDA), which requires certain mortgage lenders to accurately collect and report data about home mortgage loans.

As per a CFPB press release, Walpole, Mass.-based Mortgage Master Inc. has been ordered to pay $425,000 in penalties for significant data errors in the 21,015 mortgage loan applications it reported for 2011.

In addition, Seattle-based Washington Federal has been ordered to pay $34,000 in penalties for significant errors in the 5,785 mortgage loan applications it reported for 2011.

Besides the fines, both banks have been ordered to correct and resubmit their 2011 HMDA data, as well as to develop and implement effective compliance management systems to prevent future violations.

‘When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending,’ says Richard Cordray, director of the CFPB. ‘Today we are sending a strong signal that no mortgage lending institution – whether bank or nonbank – should be able to mislead the public with erroneous data.’

The CFPB also released a bulletin putting mortgage lenders on notice about the importance of submitting correct mortgage loan information under HMDA.

The bureau says it recently audited dozens of lenders for HMDA compliance and found that most have adequate systems and processes in place. However, in reviews conducted at Mortgage Master and Washington Federal, the CFPB found inadequate systems, which in turn, resulted in ‘severely compromised mortgage lending data.’

The two companies have agreed to pay the penalties.

‘After a rigorous audit, which took over a year, the CFPB raised a matter concerning our reporting under the Home Mortgage Disclosure Act,’ says Paul Anastos, president of Mortgage Master, in response to the enforcement action. ‘Their finding was related to administrative errors in our reporting system, and the audit confirmed that no borrowers were harmed in any way, nor did any borrowers need to be refunded. We agreed to settle this matter with the CFPB and the state of Massachusetts.’

‘Mortgage Master has a strong commitment to comply flawlessly with all reporting requirements,’ Anastos adds. ‘The agencies are applying greater scrutiny in all areas of regulatory enforcement, which is needed to achieve 100 percent industry compliance. We have addressed the system issues that caused the reporting errors and we are in the process of verifying the accuracy of all data through the end of second quarter of 2013.’

‘We will continue to evaluate all business operations to ensure they are efficient, effective, and compliant,’ Anastos says. ‘And, as regulatory enforcement continues to rise in all areas of the financial sector, we will continue to work closely with all regulators to ensure best practices.’

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