The Consumer Financial Protection Bureau has ordered Nationstar Mortgage LLC to pay a $1.75 million civil penalty for violating the Home Mortgage Disclosure Act by consistently failing to report accurate data about mortgage transactions for 2012 through 2014. The enforcement action is the largest HMDA civil penalty imposed by the bureau to date, which stems from Nationstar’s market size, the substantial magnitude of its errors, and its history of previous violations, said the bureau’s press release.
“Financial institutions that violate the law repeatedly and substantially are not making serious enough efforts to report accurate information,” said CFPB Director Richard Cordray. “Today we are sending a strong reminder that HMDA serves important purposes for many stakeholders in the mortgage market, and those required to report this information must make more careful efforts to follow the law.”
Compliance requirements. Nationstar, a nationwide nonbank mortgage lender headquartered in Coppell, Texas, is a wholly owned subsidiary of Nationstar Mortgage Holdings Inc. The Home Mortgage Disclosure Act of 1975 requires many mortgage lenders to collect and report data about their mortgage lending to appropriate federal agencies and make it available to the public. Federal regulators, enforcement agencies, community organizations, and state and local agencies can use the information to monitor whether financial institutions are serving housing needs in their communities.
In its supervision process, the CFPB found that Nationstar’s HMDA compliance systems were flawed, and generated mortgage lending data with significant, preventable errors. Nationstar also failed to maintain detailed HMDA data collection and validation procedures, failed to implement adequate compliance procedures, and produced discrepancies by failing to consistently define data among its various lines of business. In the samples reviewed, the CFPB found error rates of 13 percent in 2012, 33 percent in 2013, and 21 percent in 2014.
Order. The CFPB’s order requires Nationstar to:
- pay a $1.75 million penalty;
- develop and implement an effective compliance management system; and
- fix HMDA reporting inaccuracies.
Since the CFPB’s examination, Nationstar has been taking further steps to improve its HMDA compliance management system and increase the accuracy of its HMDA reporting, as detailed in its Form 10-K to the Securities and Exchange Commission.
