CFPB Warns Financial Institutions About Potential Mortgage Lending Reporting Failures

CFPB Puts 44 Mortgage Lenders and Brokers on Notice That They May Be Required to Report Mortgage Data

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) is issuing warning letters to 44 mortgage lenders and mortgage brokers. The Bureau has information that appears to show they may be required to collect, record, and report data about their housing-related lending activity, and that they 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The Home Mortgage Disclosure Act, which was originally enacted in 1975, requires many financial institutions to collect data about their housing-related lending activity, including home purchase loans, home improvement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. Annually, these financial institutions must report to the appropriate federal agencies and make the data available to the public. The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment so as to attract private investment to areas where it is needed, 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. The warning letters flag that entities that meet certain requirements are required to collect, record, and report mortgage lending data. The letters say that recipients should 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 Bureau if they think the law does not apply to them. The CFPB, in sending these letters, made no determination that a legal violation did, in fact, occur.

A sample letter is available at:
files.consumerfinance.gov/f/documents/102016_cfpb_HMDA_Non_Reporter_Warning_Letter.pdf

In October 2015, the CFPB finalized a rule updating the reporting requirements of the Home Mortgage Disclosure Act regulation. 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.

In October 2013, the CFPB released a bulletin putting mortgage lenders on notice about the importance of submitting correct mortgage loan information.

What does this warning mean for HMDA filers?

The CFPB's October 27, 2016 release announced warning letters to 44 mortgage lenders and brokers whose data suggested they might have to report under HMDA and were not doing so. The sample letter applies Regulation C's coverage test for lenders other than banks, savings associations and credit unions. It says the CFPB had not found a violation, but that any action "could result in the imposition of the full range of available remedies, including injunctive relief and civil money penalties."

The compliance task here comes before data quality: deciding each year whether your institution has to report at all. The coverage test in that letter is the 2016 version, and the release itself notes the 2015 rule whose provisions mostly took effect on January 1, 2018, so test coverage against current Regulation C rather than the letter. Our HMDA reportability checker walks through the current institutional and transaction tests. For lenders that do report, accuracy is the next question, and the release points back to the CFPB's October 2013 bulletin on exactly that.

For mortgage loan questions or to submit a complaint, consumers can contact the CFPB at (855) 411-2372 or visit consumerfinance.gov