CFPB fines Washington Federal $200,000 for HMDA errors

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Washington Federal Bank in Seattle has agreed to pay a $200,000 fine to settle allegations by the Consumer Financial Protection Bureau that it reported inaccurate data about home loan applications.

The CFPB said the unit of the $18 billion-asset Washington Federal submitted Home Mortgage Disclosure Act data in 2016 and 2017 that contained significant errors.

The CFPB and other regulators use HMDA data to examine and identify fair-lending violations. Inaccurate data can make it hard for regulators and the public to root out discrimination in mortgage lending, the bureau said in a press release.

Washington Federal reported HMDA data on 7,000 loans in 2016 and 2017. The bank currently is subject to a 2013 consent order based on previous findings by the CFPB that it violated HMDA and Regulation C.

"The occurrence of errors in many different fields, rather than concentrated in one or two fields, indicates broad [compliance management system] failures and a lack of adequate resources, because the errors were not caught, and the errors cannot be directly attributed to one or two systemic failures," the bureau said in the order, which was released Tuesday.

The bank’s HMDA errors in 2016 were caused by a lack of staff, insufficient training and ineffective quality control, the bureau said. In a review of 100 files, the CFPB found a 40% error rate in Washington Federal’s 2016 HMDA data.

The 2017 HMDA errors are directly related to weaknesses in the bank’s compliance-management system, board and management oversight, monitoring, and policies and procedures, the CFPB said.

The bank did not immediately respond to a request for comment.

In addition to the $200,000 civil money penalty, the bank is required to develop and implement an effective compliance-management system to prevent future violations, the CFPB said.

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CFPB HMDA Mortgage applications Consumer lending Enforcement actions Compliance systems Community banking