Pricing exceptions are widespread in mortgage — and so are the regulatory risks

Read Now
CFPBEnforcementPolitics & Money

CFPB orders Bank of America to pay $12M for submitting false mortgage data

According to the CFPB, hundreds of LOs at BofA failed to ask demographic questions over a four-year period

The Consumer Financial Protection Bureau (CFPB) imposed a $12 million penalty on Bank of America (BofA) for violating federal laws by submitting false mortgage lending information for about four years, it announced on Monday. 

A top-20 U.S. mortgage lender, Charlotte-based BofA had $229 billion in outstanding residential mortgages on its books through Sept. 30. Overall, the bank posted a net income of $7.8 billion in the third quarter of 2023. 

According to the CFPB, hundreds of loan officers at BofA failed to ask mortgage applicants demographic questions and falsely reported that they had chosen not to respond. 

A spokesperson for Bank of America did not immediately reply to a request for comments. In a statement provided via email after publication, a spokesperson said the bank “collected demographic data in more than 99% of applications in the years reviewed by the CFPB.” In addition, BofA “consistently had lower percentages of applicants not disclosing their race compared to annual industry averages.”

“After receiving one complaint in 2020, we conducted a review and notified the government, which prompted this inquiry. As the CFPB notes, we took additional steps in 2020 and 2021 to enhance our monitoring and training to ensure employees ask applicants for required racial, ethnic and gender information. This data collection issue had no impact on applications,” the spokesperson wrote.

The 1975 Home Mortgage Disclosure Act (HMDA) requires lenders to report information about loan applications and originations to the CFPB and other federal regulators. The bank’s conduct violated HMDA, Regulation C and the Consumer Financial Protection Act of 2010, the CFPB states. 

“It is illegal to report false information to federal regulators, and we will be taking additional steps to ensure that Bank of America stops breaking the law,” CFPB Director Rohit Chopra said in a statement. 

Specifically, the CFPB claims that these LOs said that 100% of mortgage applicants chose not to provide their demographic data over at least a three-month period when, in fact, these LOs were not asking for the information. 

According to the order, between 2016 and late 2020, the LOs didn’t ask applicants for their race, ethnicity and sex, as required by law.

The CFPB claims that the bank identified the practice as early as 2013 but “turned a blind eye for years.” 

The $12 million penalty will go to the CFPB’s victims relief fund. The bank must also develop policies and procedures to ensure compliance to the laws, including recording and auditing phone applications to ensure applicants data is accurately collected and recorded. 

BofA has been a target for the CFPB over the last few years. 

Since 2014, the CFPB and the Office of the Comptroller of the Currency (OCC) ordered the bank to pay more than $1.1 billion over allegations of illegally charging junk fees, withholding credit card rewards, opening fake accounts and deceptive credit card marketing practices, among others. 

Editor’s note: This story was updated after publication to include comments from a Bank of America spokesperson.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please