Nationstar Mortgage will pay a $1.75 million fine for failing to report accurate data about mortgage transactions for 2012 through 2014. The penalty is the largest brought under the Home Mortgage Disclosure Act, the Consumer Financial Protection Bureau said.
Nationstar had been on notice since 2011 for mortgage reporting problems, the bureau said. In addition to paying the penalty, the company is being required to improve its compliance management and prevent future violations.
“Financial institutions that violate the law repeatedly and substantially are not making serious enough efforts to report accurate information,” said Richard Cordray, director of the bureau.
Nationstar is a nationwide nonbank mortgage lender with nearly 3 million customers. It was the ninth largest by mortgages sold, the sixth largest by applications received, and the 13th largest by money lent. From 2010 to 2014, Nationstar’s mortgage loans increased by nearly 900 percent, Cordray said.
Mortgage laws require mortgage lenders to collect and report data about their mortgage lending to federal agencies and make it available to the public. Inaccurate mortgage data can make it difficult for the public and regulators to find and stop discrimination in home mortgage lending or for public officials and lenders to tell whether a community’s credit needs are being met, he said.
In routine checking on Nationstar, the bureau found that its mortgage reporting systems were flawed, and they generated mortgage lending data with significant, preventable errors.
Nationstar has a history of mortgage reporting violations, Cordray said. In 2011, the Commonwealth of Massachusetts Division of Banks reached a settlement with Nationstar to address reporting deficiencies. The samples reviewed by the bureau showed large error rates for three years, even after that settlement was reached, with 13 percent in 2012, 33 percent in 2013, and 21 percent in 2014.
In addition to paying the fine and improving its compliance management system, Nationstar will review, correct, and make available its corrected mortgage data from 2012-14.