Freedom Mortgage Corporation may find itself on the CFPB’s naughty list for repeatedly submitting error-riddled mortgage loan data to federal regulators and the CFPB has filed a proposal requiring the lender to pay a $3.95 million penalty for it.
This comes after the CFPB finalized a rule, June 3, to crack down on repeat offenders by creating a registry of nonbank financial companies that have broken consumer protection laws.
“Freedom Mortgage is a repeat offender that has ignored requirements to submit accurate data that help federal regulators maintain a fair home lending market," said CFPB Director Rohit Chopra. "The CFPB is making sure that Freedom Mortgage pays for their actions as well as institutes guardrails to prevent future violations.”
In October 2023, the CFPB sued Florida-based Freedom Mortgage for violating both the Home Mortgage Disclosure Act (HMDA) and a 2019 CFPB order.
The 2019 order stems from a previous transgression in which Freedom Mortgage violated HMDA and Regulation C by submitting mortgage-loan data for 2014 to 2017 that contained errors. The bureau found that between 2014 and 2017, Freedom intentionally reported inaccurate race, ethnicity, and sex information. At the time, 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. Freedom was instructed to take steps to improve its compliance management to prevent future violations.
In 2020, Freedom reported HMDA data on over 700,000 loans and applications and originated nearly 400,000 HMDA-reportable loans, making it the third largest mortgage lender in the country by origination volume. But, for the second year in a row, Freedom reported HMDA data containing widespread errors across numerous data fields because of systemic problems with its compliance management systems.
The CFPB is proposing the order because this is the second time Freedom Mortgage submitted incorrect mortgage data in violation of HMDA, the 2019 order, and the Consumer Financial Protection Act. In addition to the near $4 million civil money penalty, the proposed order by the CFPB would require Freedom Mortgage to regularly audit, test, and correct the company’s HMDA data.
Since 2021, the CFPB has increased its focus on repeat offenders. In addition to the new registry compiling repeat offenders, the CFPB established a Repeat Offenders Unit to ensure that companies are not repeatedly violating the law.
