ARTICLE
8 November 2016

CFPB Warns Mortgage Lenders And Brokers Of Possible HMDA Violations

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On Oct. 27, 2016, the Consumer Financial Protection Bureau (CFPB) warned 44 unnamed mortgage lenders and brokers that they may be in violation of data reporting requirements of the HMDA.
United States Finance and Banking
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On Oct. 27, 2016, the Consumer Financial Protection Bureau (CFPB) warned 44 unnamed mortgage lenders and brokers that they may be in violation of data reporting requirements of the Home Mortgage Disclosure Act (HMDA).

Enacted in 1975, HMDA requires financial institutions to collect data about housing-related lending activity – including home purchase loans, home improvement loans and home refinancing loans that they originate or purchase or for which they receive applications – and report the information to the appropriate federal agency. The data is then used by regulators, including the CFPB, and the public to monitor lending practices nationwide and identify patterns of discriminatory lending behavior. Additionally, the data is used to ensure financial institutions are serving the housing needs of their communities and attracting private investment to areas of need.

As CFPB Director Richard Cordray stated, "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."

Last October, the CFPB finalized a rule updating HMDA's reporting requirements to improve the quality of data reported and provide insight into consumers' access to credit. Much of the finalized rule will take effect on Jan. 1, 2018.

Although the CFPB did not determine whether any of the 44 financial institutions are in violation of HMDA, it issued warning letters urging them to review their practices to ensure that they comply with HMDA's reporting requirements. The CFPB also encouraged these institutions to advise the Bureau of steps they took or plan to take to comply with HMDA or, if they do not believe they are subject to HMDA, to provide an explanation.

The CFPB's warning letter, issued by Fair Lending Director Patrice Alexander Ficklin, can be found here.

We will continue to monitor HMDA-related developments affecting the financial services industry.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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