Nationstar Mortgage will pay $1.75 million to settle allegations brought by the Consumer Financial Protection Bureau (CFPB) that the company violated the reporting requirements under the Home Mortgage Disclosure Act (HMDA).
The fine comes ahead of even stricter HMDA reporting requirements that are scheduled to take effect next year.
The CFPB claims that the non-bank mortgage lender/servicer’s “HMDA compliance systems were flawed” and, thus, “generated mortgage lending data with significant, preventable errors ” during a three-year period from 2012 to 2014. The bureau says in a release that Nationstar “failed to maintain detailed HMDA data collection and validation procedures” and “failed to implement adequate compliance procedures.”
It is also accused of causing “discrepancies by failing to consistently define data among its various lines of business.”
The CFPB points out that the Massachusetts Division of Banks reached a settlement with Nationstar in 2011 to address HMDA compliance deficiencies. The results of that action prompted the CFPB to conduct its own review of the company’s operations, which, it says, “showed substantial error rates in three consecutive reporting years, even after that settlement was reached.”
The CFPB claims that it found deficiencies in 13% of the loans it sampled from 2012; in 33% of the loans it sampled from 2013; and in 21% of the loans it sampled from 2014.
In a statement, Nationstar says the settlement “does not reflect any wrong-doing impacting customers or fair lending; but rather, technical data issues that we have worked tirelessly to resolve through significant investments.”
“Nationstar understands how accurate HMDA data is critical to fair lending, and we regret the mistakes that led to the reporting errors,” the lender says in its statement. “These data issues are not reflective of our customer and compliance-driven business practices, and we remain committed to treating every applicant fairly and responsibly.
“Over the past two years, Nationstar has proactively made substantial investments in new staff, training and technology to enhance all of our HMDA-related processes and controls. As Nationstar made these sizable investments in enhancing our HMDA processes, we provided the CFPB with frequent updates to reinforce that our leadership takes regulatory compliance seriously.”