CFPB Warns Mortgage Lenders on Data Reporting

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By Jeff Bater

Oct. 27 — The Consumer Financial Protection Bureau is pressing mortgage lenders on meeting their obligations to report data the agency uses to identify discriminatory lending.

The CFPB issued warning letters to 44 mortgage lenders and mortgage brokers about their potential noncompliance with the Home Mortgage Disclosure Act (HMDA), according to a news release.

The companies were identified by CFPB review of available bank and nonbank mortgage data. The bureau made clear that in sending the letters, it had made no determination that a legal violation did, in fact, occur.

Possible Violation?

“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,” the CFPB said.

HMDA was enacted in 1975 to require banks, thrifts, credit unions and nonbank mortgage companies to disclose data to federal regulators about mortgage loans they make and applications they receive. Last year, the CFPB finalized a rule expanding the amount of information that must be reported (200 Banking Daily 200, 10/16/15). Most provisions of the rule take effect Jan. 1.

Congress passed HMDA out of concern over credit shortages in certain urban neighborhoods and the possibility that some financial institutions may have contributed to those shortages. HMDA's stated purposes were to assist regulators in determining whether lenders were appropriately serving the credit needs of their communities and to assist public officials in making housing-related investments. The Dodd-Frank Act granted the CFPB broad authority to expand the HMDA dataset as it saw fit (21 Banking Daily, 2/2/16).

Call for Review

The CFPB called on the 44 letter recipients to review their practices to ensure they comply with all relevant laws. The agency did not name the companies in the news release.

“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,” the agency said. “They can also tell the bureau if they think the law does not apply to them.”

Richard Cordray, the CFPB director, said financial institutions that fail to report mortgage information as required make it harder to identify and address discriminatory lending.

“No mortgage lender that is required to report their loan data can avoid this responsibility,” he said.

To contact the reporter on this story: Jeff Bater in Washington at jbater@bna.com

To contact the editor responsible for this story: Mike Ferullo in Washington at mferullo@bna.com

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