CFPB Slaps Bank of America with $12 Million Penalty for False Mortgage Data Reporting

The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay a hefty $12 million penalty for submitting false mortgage lending information to the federal government over a period of at least four years. The violation pertains to the bank's failure to adhere to federal law, which mandates mortgage lenders to gather and report demographic information from applicants under the Home Mortgage Disclosure Act (HMDA).

Bank of America, a global systemically important bank with $2.4 trillion in assets as of June 2023, headquartered in Charlotte, North Carolina, faces the consequences of its loan officers' failure to ask required demographic questions to mortgage applicants. Instead of following protocol, these officers allegedly falsely reported that applicants had chosen not to respond.

The HMDA, enacted in 1975, serves as a crucial tool for monitoring the U.S. mortgage market, requiring financial institutions to disclose information about loan applications and originations to regulatory bodies, including the CFPB. The collected data, publicly available, aids in assessing whether financial institutions are meeting the housing needs of their communities and identifying potential discriminatory lending patterns.

The CFPB's investigation into Bank of America's HMDA data collection practices revealed a pattern of false reporting, with loan officers inaccurately stating that applicants declined to provide demographic information. This breach not only violated HMDA and its implementing regulation, Regulation C, but also contravened the Consumer Financial Protection Act.

Specifically, the CFPB found:

1. False Reporting of Applicant Responses: Hundreds of Bank of America loan officers recorded that 100% of mortgage applicants declined to provide demographic data over a three-month period. In reality, these loan officers had not even asked for the required information, instead falsely indicating that applicants chose not to disclose.
2. Inadequate Oversight of Data Collection: The bank failed to ensure the accurate collection and reporting of demographic data as required by HMDA. Despite identifying deficiencies in data collection by phone applications as early as 2013, Bank of America neglected the issue for years.

This enforcement action is not the first against Bank of America, as the CFPB and the Office of the Comptroller of the Currency (OCC) jointly ordered the bank to pay over $200 million in July 2023 for various infractions, including illegal fees and deceptive credit card practices. In 2022, fines totaling $225 million were imposed for the mishandling of state unemployment benefits, and the bank also paid a $10 million penalty for unlawful garnishments of customer accounts. In 2014, a $727 million settlement was reached for illegal and deceptive credit card marketing practices.

CFPB Director Rohit Chopra emphasized the gravity of the situation, stating, "Bank of America violated a federal law that thousands of mortgage lenders have routinely followed for decades." The $12 million penalty, designated for the CFPB's victims relief fund, underscores the regulatory commitment to maintaining integrity and transparency in the mortgage lending sector.

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