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Politics & Money

CFPB issues consent order against Washington Federal for HMDA reporting violations

Weaknesses were specifically found in the areas of board and management oversight, monitoring, and policies and procedures

The Consumer Financial Protection Bureau issued a consent order against Washington Federal Bank in October for Regulation C and Home Mortgage Disclosure Act violations. The bank will pay a $200,000 fine for reporting inaccurate HMDA data in 2016 and 2017 — with error rates up to 40% in some cases, according to the CFPB.

The settlement also orders Washington Federal to “develop and implement an effective compliance-management system to prevent future violations,” per the CFPB.

“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 CFPB said in a release.

Washington Federal reported HMDA data for over 7,000 mortgage applications in each of 2016 and 2017, many of which contained data error rates reaching nearly 40%. The CFPB investigation turned up “a lack of appropriate staff, insufficient staff training, and ineffective quality control,” and said 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,” the report read. “These significant errors in reported mortgage-application data violated Regulation C and HMDA. These violations also constituted violations of the Consumer Financial Protection Act of 2010.”

Washington Federal is located in Seattle.

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