The Consumer Financial Protection Bureau (CFPB) has recently imposed a $12 million penalty on Bank of America for providing false mortgage lending data to the federal government. This violation of a long-standing federal law spanned at least four years, during which numerous Bank of America loan officers neglected to ask mortgage applicants specific demographic questions. They then falsely reported that these applicants had opted not to respond.
As per the CFPB’s order, the Charlotte, North Carolina-based Bank of America, the second-largest bank in the United States with assets of $2.4 trillion as of June 2023, is required to pay $12 million into the CFPB’s victims relief fund.
The Home Mortgage Disclosure Act (HMDA), enacted in 1975, mandates mortgage lenders to report data about loan applications and originations to the CFPB and other federal regulators. The collected data under HMDA, which is publicly available, serves as a significant resource on the U.S. mortgage market. It allows the public and regulators to monitor if financial institutions are addressing their communities’ housing needs and identify potential discriminatory lending patterns.
The CFPB’s review of Bank of America’s HMDA data collection practices revealed that the bank had submitted false data, including inaccurately reporting that mortgage applicants were declining to answer demographic questions. This conduct contravened HMDA and its implementing regulation, Regulation C, as well as the Consumer Financial Protection Act. Specifically, the CFPB discovered that Bank of America:
- Incorrectly reported that applicants declined to provide information: Hundreds of Bank of America loan officers reported that all mortgage applicants chose not to provide their demographic data over a period of at least three months. In reality, these loan officers were not asking applicants for demographic data but were falsely recording that the applicants chose not to provide the information.
- Failed to oversee accurate data collection: Bank of America did not ensure that its mortgage loan officers accurately collected and reported the demographic data required under HMDA. For instance, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but the bank ignored the issue for years despite being aware of the problem.
The CFPB has previously taken multiple actions against Bank of America for violating federal law. In July 2023, the CFPB and the Office of the Comptroller of the Currency (OCC) ordered Bank of America to pay over $200 million for illegally charging junk fees, withholding credit card rewards, and opening fake accounts. In 2022, CFPB and OCC ordered Bank of America to pay $225 million in fines and refund hundreds of millions of dollars to consumers for botched disbursement of state unemployment benefits. That same year, Bank of America also paid a $10 million penalty for unlawful garnishments of customer accounts. And in 2014, the CFPB ordered Bank of America to pay $727 million to consumers for illegal and deceptive credit card marketing practices.
The order requires Bank of America to take measures to stop its illegal mortgage data reporting practices and to pay a $12 million penalty to the CFPB’s victims relief fund.
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