The Consumer Financial Protection Bureau (CFPB) has closed an oversight agreement with Bank of America over violations of the Home Mortgage Disclosure Act (HMDA). Termination of the order ends the Bureau’s monitoring of Bank of America more than three years ahead of schedule.
On November 28, 2023, the CFPB ordered Bank of America to pay a $12 million penalty for submitting false mortgage lending information to the federal government. Payments were intended for the CFPB’s victims’ relief fund. For at least four years, Bank of America loan officers reportedly failed to ask mortgage applicants certain demographic questions as required under federal law, and then falsely reported that the applicants had chosen not to respond.
The CFPB stated that Bank of America fulfilled its obligations under the order, including, payment of the $12 million civil monetary penalty, development of a compliance plan and an annual report, and implementation of improvements to its HMDA compliance management system.
Established in 1975, HMDA requires mortgage lenders to report information about loan applications and originations to the CFPB and other federal regulators. The data collected under HMDA are the most comprehensive source of publicly available information on the U.S. mortgage market. The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities, and to identify possible discriminatory lending patterns. HMDA requires financial institutions to report demographic data about mortgage applicants.
The CFPB’s review of Bank of America’s HMDA data collection practices found that the bank was submitting false data, including falsely reporting that mortgage applicants were declining to answer demographic questions, conduct violating HMDA and its implementing regulation, Regulation C, as well as the Consumer Financial Protection Act. Specifically, the CFPB found that Bank of America:
- Falsely reported that applicants declined to provide information: Hundreds of Bank of America loan officers reported that 100% of mortgage applicants chose not to provide their demographic data over at least a three-month period. These loan officers were not asking applicants for demographic data, but were accused of falsely recording that the applicants chose not to provide the information.
- Failed to adequately oversee accurate data collection: The CFPB claimed that Bank of America did not ensure its mortgage loan officers accurately collected and reported the demographic data required under HMDA. For example, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but did not acknowledge the issue.
CFPB was set to oversee the issue for five years unless it chose to end its oversight early, citing that Bank of America fulfilled its obligations.
