By Stephanie K. Mann, J.D.
The Consumer Financial Protection Bureau has issued warning letters to 44 mortgage lenders and mortgage brokers who may be required to collect, record, and report data about their housing-related lending activity and who may be in violation of those requirements. “Financial institutions that fail to report mortgage information as required make it harder to identify and address discriminatory lending,” said CFPB Director Richard Cordray. “No mortgage lender that is required to report their loan data can avoid this responsibility.”
The Home Mortgage Disclosure Act requires many financial institutions to collect and annually report data about their housing-related lending activity, including home purchase loans, home improvement loans, and refinancings that they originate or purchase, or for which they receive applications. The public and regulators use this information to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment, and to identify possible discriminatory lending patterns.
Data transparency helps to ensure that financial institutions are not engaging in discriminatory lending or failing to meet the credit needs of the entire community, including low- and moderate-income neighborhoods. Financial institutions that avoid their responsibility to collect and report mortgage loan data hinder regulatory efforts to enforce fair lending laws.
The CFPB identified the 44 companies by reviewing available bank and nonbank mortgage data and advises the companies to review their practices to ensure they comply with all relevant laws. The companies are encouraged to respond to the bureau to advise if they have taken, or will take, steps to ensure compliance with the law. They can also tell the CFPB if they think the law does not apply to them. According to the letters, the bureau has not yet made a determination that a legal violation has occurred.
In October 2015, the CFPB finalized a rule updating the reporting requirements of the Home Mortgage Disclosure Act regulation. The CFPB has said that the rule will improve the quality and type of data that is collected and reported, including shedding more light on consumers’ access to credit. Most of the provisions of the final rule will take effect on Jan. 1, 2018.
For more information about CFPB enforcement actions, subscribe to the Banking and Finance Law Daily.
