WASHINGTON — The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court alleging Freedom Mortgage Corp. submitted legally-required mortgage loan data that was “riddled with errors.”
The CFPB said Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals.
Freedom Mortgage is a privately held nonbank mortgage loan originator and servicer headquartered in Boca Raton, Fla. According to the Bureau, in 2020 Freedom reported HMDA data on more than 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion.
‘Regardless of Whether it Was Accurate’
In 2019, the CFPB said it found Freedom Mortgage had intentionally misreported HMDA data about applicants’ race and ethnicity.
“For example, certain loan officers were told by managers or other loan officers that when applicants did not provide their race or ethnicity, they should select non-Hispanic white regardless of whether that was accurate,” the CFPB said.
The 2019 order required Freedom to pay a $1.75 million penalty, improve its compliance management system, and avoid future HMDA violations.
In its new lawsuit, the CFPB is alleging the HMDA data Freedom submitted for 2020 contained widespread errors across multiple data fields, and that the errors constitute violations of HMDA, the Consumer Financial Protection Act, and the 2019 order.
Specific Allegations
Specifically, the is alleging:
- Freedom reported information to regulators with widespread inaccuracies. “After the CFPB found 51 errors in an initial review of 159 files in Freedom’s 2020 submission, the company had to resubmit its data. In that resubmission, Freedom corrected errors in 35 different required HMDA data fields—this reflects errors in over 174,000 data entries affecting nearly 20 percent of Freedom’s mortgage loan applications.”
- Freedom violated a 2019 law enforcement order. “Freedom was ordered in 2019 to clean up its deficient data practices, but failed to do so. Instead, it continued to provide federal regulators with error-ridden data.”
Enforcement Action
The lawsuit seeks to stop Freedom’s “alleged unlawful conduct and for it to pay a civil money penalty which will be deposited in the CFPB’s victims relief fund,” the CFPB said.
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