Today, the Consumer Financial Protection Bureau (Bureau) settled with Washington Federal Bank, N.A., a federally insured national bank, to address the Bureau’s finding that it reported inaccurate Home Mortgage Disclosure Act (HMDA) data about its mortgage transactions for 2016 and 2017. Inaccurate HMDA data can make it difficult for the public and regulators to discover and stop discrimination in home mortgage lending or for public officials and lenders to tell whether a community’s credit needs are being met. The settlement requires Washington Federal to pay a $200,000 civil money penalty and develop and implement an effective compliance-management system to prevent future violations.
The Bureau found that Washington Federal, headquartered in Seattle, Washington, violated HMDA, its implementing regulation, Regulation C, and the Consumer Financial Protection Act of 2010 (CFPA) by failing to report accurate data about its mortgage-loan applications to the Bureau. Washington Federal is currently subject to a 2013 consent order with the Bureau based on the Bureau’s previous findings that Washington Federal violated HMDA and Regulation C.
Washington Federal reported HMDA data for over 7,000 mortgage applications in each of 2016 and 2017. The Bureau found that these data included significant errors, with some samples having error rates as high as 40%. The Bureau found that the errors in Washington Federal’s 2016 HMDA data were caused by a lack of appropriate staff, insufficient staff training, and ineffective quality control, and that the errors in its 2017 HMDA data were directly related to weaknesses in Washington Federal’s compliance-management system. Weaknesses were specifically found in the areas of board and management oversight, monitoring, and policies and procedures. These significant errors in reported mortgage-application data violated Regulation C and HMDA. These violations also constituted violations of the CFPA.
The consent order is available at: https://files.consumerfinance.gov/f/documents/cfpb_washington-federal-na_consent-order_2020-10.pdf .