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CFPB Sues Freedom Mortgage Over Alleged Data Missteps

Christine Stuart
Oct 10, 2023
Courtroom Pic/Credit: Vladek

After a prior $1.75 million penalty, the mortgage giant faces another lawsuit over breach of federal requirements and inaccurate data submissions.

The Consumer Financial Protection Bureau is suing Freedom Mortgage Corporation, accusing the mortgage lender of submitting error-filled mortgage loan data in breach of federal requirements.

In the lawsuit filed Tuesday in the Southern District of Florida, the CFPB claims that Freedom’s actions contravene the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. It's worth noting that just a few months ago Freedom was slapped with a $1.75 million fine by the CFPB for engaging in illegal kickbacks tied to mortgage loan referrals.

“The CFPB is suing Freedom Mortgage for violating a law enforcement order and for providing false data on its mortgage operations,” said CFPB Director Rohit Chopra. “The CFPB will continue to focus on ending the cycle of misconduct by repeat offenders in the financial industry.”

Freedom Mortgage did not immediately respond to requests for comment. 

Freedom Mortgage Corporation is a nonbank mortgage loan originator and servicer, headquartered in Boca Raton, Florida. In 2020, the year covered by the lawsuit, the corporation reported HMDA data on over 700,000 mortgage loan applications, leading to nearly 400,000 loans that collectively totaled around $100 billion.

HMDA mandates that mortgage lenders disclose specific details about loan applications and originations to federal regulators. This data forms the primary public insight into the U.S. mortgage market, enabling both the public and regulators to assess whether financial institutions are catering to their communities' housing requirements and identifying potential discriminatory lending patterns.

It's not Freedom's first run-in with the CFPB. In 2019, the bureau determined that Freedom intentionally misreported HMDA data concerning the race and ethnicity of applicants. To highlight the severity, some loan officers were reportedly instructed to inaccurately label applicants as non-Hispanic white when no information about race or ethnicity was provided. The 2019 order mandated Freedom to pay a $1.75 million penalty and mandated corrective measures, including a stronger compliance management system and a halt to any future HMDA breaches.

However, the CFPB now alleges that the 2020 HMDA data submitted by Freedom still needed to be revised, violating HMDA, the Consumer Financial Protection Act, and the 2019 order. The lawsuit contends that after an initial review identified 51 errors in 159 files from Freedom’s 2020 submission, a subsequent resubmission from the company revealed errors in over 174,000 data entries, impacting nearly 20% of its mortgage loan applications.

The bureau's lawsuit asks the court to stop Freedom's alleged misreporting of data and impose a civil penalty. 

Oct 10, 2023
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