Compliance Blog

Written by Michael Coleman, Regulatory Compliance Counsel

The Consumer Financial Protection Bureau recently released CFPB Bulletin 2013-11, which concerns: HMDA Compliance Management; the CFPB’s HMDA Resubmission Schedule and Guidelines; and the CFPB’s HMDA Enforcement. The Bulletin comes in the wake of two Consent Orders issued by the CFPB for HMDA reporting violations (see the CFPB press release for more details).

As the result of the HMDA violations found in a CFPB Exam, the CFPB issued a Consent Order against Mortgage Master, Inc. (a nonbank headquartered in Walpole, MA) requiring it to pay a civil penalty of $425,000, correct and resubmit its 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations.

The CFPB also issued a Consent Order against Washington Federal (a bank headquartered in Seattle, WA) as a result of a CFPB exam, the order requires it to pay a civil penalty of $34,000, correct and resubmit its 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations.

So what does this mean for credit unions? Even if your credit union is not under the CFPB’s direct supervisory authority (those credit unions with less than $10B in assets), this CFPB Bulletin provides a clear sign that HMDA reporting is on the CFPB’s radar. And keeping your finger on the pulse of the CFPB’s hit list is never a bad thing. The Bulletin provides a breakdown of what the CFPB expects in relation to HMDA compliance management systems, here is an excerpt:

“HMDA Compliance Management

Given the importance of accurate HMDA data to fulfilling the statute’s purposes, the CFPB is committed to ensuring that Bureau-supervised mortgage lenders, whether depository or non-depository institutions, develop and/or maintain appropriate HMDA compliance management systems designed to ensure the accuracy of HMDA data. The scope, complexity, and size of each CFPB supervised institution’s lending operations vary, and we expect that compliance management systems will be calibrated accordingly. Based on the CFPB’s supervisory experience, effective HMDA compliance management systems frequently include:

• Comprehensive policies, procedures, and internal controls to ensure ongoing compliance with the collection and reporting requirements set forth in HMDA and Regulation C;
• As appropriate to the size and complexity of the institution, comprehensiveand regular internal, pre-submission HMDA audits, to test and evaluate dataaccuracy, and that include a reasonable amount of transactional analysis,written reports detailing findings, and recommendations for correctiveactions;
• Reviews of any regulatory changes that may have occurred since the prior examination and/or data collection and reporting cycle;
• Reporting systems that are appropriate given the volume of the institution’s lending operations;
• One or more individuals assigned responsibility for oversight, data entry, and data updates, including the timely and accurate reporting of the institution’s data;
• Appropriate, sufficient, and periodic employee training to ensure that responsible personnel understand HMDA and Regulation C standards and reporting requirements; 
• Effective corrective action in response to previously identified deficiencies; and
• As appropriate, board and management oversight.

Each institution should ensure that its HMDA compliance management system is tailored appropriately to its operations. The CFPB also encourages institutions to apply the Bureau’s HMDA Resubmission Schedule and Guidelines, which are discussed below, to manage HMDA compliance and facilitate effective corrective action on self-identified errors.”

The CFPB also released their HMDA resubmission guidelines in addition to the Bulletin, both are worth a closer look.

And don’t forget, the Federal Financial Institution Examination Council (FFIEC) issued the 2013 HMDA Getting it Right! Guide back in April, it is a great resource for HMDA compliance. You can find the full PDF of the 2013 Guide here. 

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Programming Note.  NAFCU’s offices will close today at noon and remain closed Monday for the long holiday weekend.  We’ll be back to blogging next Wednesday!  Have a great weekend!