MortgageOriginationRegulatory

CFPB proposes $3.95M fine for Freedom Mortgage over false data accusations

The agreement requires Freedom to regularly audit, test and correct its HMDA data

The Consumer Financial Protection Bureau (CFPB) has proposed that lender and servicer Freedom Mortgage Corp. pay $3.95 million for alleged violations of a 2019 consent order and the Home Mortgage Disclosure Act (HMDA) when it submitted incorrect mortgage data.

The proposed order was filed on Tuesday in a U.S. district court in West Palm Beach, Florida, following setbacks in recent months for both parties in an ongoing lawsuit.

The document states that the CFPB and Freedom Mortgage have agreed to enter into the proposal, with the defendant neither denying nor admitting to the allegations in the complaint.

A spokesperson for Freedom told HousingWire that the company had no comment.

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

The case was originally filed in October 2023 when the CFPB claimed that Freedom submitted its 2020 HMDA data to the bureau in early 2021 with “widespread and significant errors.”

In December, Freedom moved to dismiss the case in Florida, but Judge Donald Middlebrooks declined the request. In April, Magistrate Judge William Matthewman found in favor of Freedom when it requested to compel the CFPB to produce information about how the bureau views the “gravity of the violation” and “what sorts of ‘errors’ constitute ‘violations.'”

If the proposed settlement is not approved, the case will be tried in July. The agreement imposes injunctive relief to prevent Freedom from violating the law in the future, and it requires the company to regularly audit, test and correct its HMDA data.

Freedom reported data on 700,000 closed loans and applications in 2020, originating about 400,000 HMDA-reportable loans. That was enough to make it the third-largest U.S. mortgage lender by volume, according to the CFPB.

Inside Mortgage Finance estimates the company originated $11.8 billion from January to March 2024, more than three times the amount originated in the same period of 2023.

When the errors in the 2020 data were identified, the CFPB had already entered into a consent order with Freedom to pay $1.75 million for errors in its 2019 data regarding borrower race and ethnicity.

These are not the only recent cases involving the CFPB and Freedom. In 2023, the bureau issued orders against Freedom and Realty Connect USA Long Island for allegedly engaging in illegal kickbacks, the first case involving the 1974 Real Estate Settlement Procedures Act (RESPA) in six years. Freedom was ordered to pay $1.75 million related to the case, while Realty Connect was slapped with a $200,000 penalty. 

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