CFPB Terminates Consent Orders with Regional Bank and Independent Mortgage Lender
The CFPB terminated consent orders with a regional bank and an independent mortgage lender, to which the respective parties had agreed following separate administrative enforcement actions alleging that the bank had inaccurately reported mortgage transaction data and that the lender had accepted illegal referral payments and impermissibly obtained credit reports.
The CFPB and the bank had entered into a consent order in October 2013 to resolve allegations that the bank had inaccurately reported data on 5,785 mortgage loans in violation of HMDA. Specifically, the Bureau found a 38% sample error rate (which exceeded its error rate threshold) in the representative sample of HMDA data that it reviewed. The Bureau also found that the bank’s compliance management system did not include reasonable procedures to avoid such high error rates.
The recent order terminates the consent order, stating that the bank has fulfilled specific obligations under the consent order, including payment of a $34,000 civil money penalty.
The CFPB and the independent lender had entered into a consent order in January 2017 to resolve allegations that the lender had accepted payments for the referral of mortgage business in violation of RESPA and had obtained consumer reports in violation of FCRA.
As to the RESPA allegations, the Bureau found that the lender marketed another company’s services (including mortgage refinances) to its servicing clients. In exchange for its efforts, the lender allegedly received a share of the proceeds from the other company’s secondary market sale of mortgages that the lender had referred and the servicing rights to those mortgages.
As to the FCRA allegations, the Bureau found that the lender had ordered consumer reports showing “hard” credit inquiries that arose when one of its servicing clients submitted a mortgage application (so-called “trigger leads”). Because it did not make a firm offer of credit to these clients and marketing is not a permissible purpose, the lender allegedly violated FCRA by obtaining consumer reports without a permissible purpose.
The recent order terminates the consent order, stating that the lender has fulfilled specific obligations under the consent order, including payment of $265,000 in consumer redress and revised business practices.
