CFPB Seeks $3.95 Million Penalty from Freedom Mortgage for Inaccurate Data Reporting

Consumer Financial Protection Bureau Requests Information on the Impact of the CARD Act Regulations on Small Entities and the Consumer Credit Card Market

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) is taking action against Freedom Mortgage Corporation, a major mortgage lender, for repeatedly submitting error-filled mortgage loan data to federal regulators. A proposed order, filed on June 18, 2024, requires the company to pay a $3.95 million penalty and implement strict measures to ensure accurate data reporting.

Background of the Case

In October 2023, the CFPB sued Freedom Mortgage for violating the Home Mortgage Disclosure Act (HMDA) and a 2019 CFPB order. The company, headquartered in Boca Raton, Florida, is one of the largest nonbank mortgage lenders in the United States. In 2020 alone, Freedom Mortgage reported data on over 700,000 mortgage loan applications and originated nearly 400,000 loans worth almost $100 billion.

Violations and Their Impact

The CFPB’s investigation revealed that Freedom Mortgage submitted incorrect HMDA data due to systemic issues within its compliance management systems. These errors spanned numerous data fields and occurred while the company was under a 2019 law enforcement order that required accurate data submissions.

HMDA data is crucial for federal regulators. It helps monitor fair lending practices and identify discriminatory lending patterns. Accurate data ensures transparency and protects consumers by holding lenders accountable. Errors in this data can obscure unfair practices, making it harder for regulators to enforce fair lending laws.

Proposed Penalties and Requirements

The CFPB’s proposed order seeks to impose a $3.95 million fine on Freedom Mortgage. This penalty will be paid into the CFPB’s victims relief fund, which compensates consumers harmed by financial violations.

In addition to the monetary penalty, the court order mandates that Freedom Mortgage adopt stringent measures to prevent future violations. The company must regularly audit, test, and correct its HMDA data. These steps aim to address the root causes of the previous errors and ensure ongoing compliance with federal regulations.

CFPB Director Rohit Chopra emphasized the significance of the action. “Freedom Mortgage is a repeat offender that has ignored requirements to submit accurate data that help federal regulators maintain a fair home lending market,” Chopra said. “The CFPB is making sure that Freedom Mortgage pays for their actions as well as institutes guardrails to prevent future violations.”

Importance of Accurate Data Reporting in Mortgage Industry

The case highlights the importance of accurate data reporting in the mortgage industry. HMDA data plays a critical role in ensuring fair lending practices. It allows regulators to detect and address discriminatory lending, ensuring that all consumers have equal access to credit.

By enforcing strict penalties and corrective measures, the CFPB aims to uphold the integrity of the mortgage lending market. This action sends a clear message to other lenders about the consequences of non-compliance. It also reassures consumers that federal regulators are committed to protecting their rights and ensuring fairness in the financial system.

Enhancing Financial Fairness: CFPB’s Stand Against Data Failings

Accurate HMDA data is not just a regulatory requirement; it’s a cornerstone of consumer protection. When lenders submit precise information, it enables regulators to identify and rectify discriminatory practices, thereby fostering a more equitable lending environment. This case underscores the ongoing need for vigilance and accountability in the financial sector.

In summary, the CFPB’s proposed order against Freedom Mortgage addresses significant failings in data reporting. The penalties and corrective measures aim to restore trust and ensure that the company complies with federal regulations moving forward. This action reinforces the CFPB’s commitment to maintaining a fair and transparent mortgage lending market.

For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and Microsoft Start.