The Consumer Financial Protection Bureau yesterday filed a lawsuit against a mortgage lender, accusing it of violating a previous enforcement order to improve the accuracy of the data it submitted to the federal government by sending in data not once, but twice that had mistakes on it.
A copy of the complaint against Freedom Mortgage, filed in the District Court for the Southern District of Florida, can be accessed by clicking here.
Under the Home Mortgage Disclosure Act (HMDA), lenders are required to submit data to the federal government, which is then made available to the public, detailing data about mortgages. The intention behind the act was to make sure that lenders were serving all areas of the communities in which they operate and were not excluding neighborhoods or communities that may have been considered to be less desirable.
Back in 2019, Freedom was found to have violated HMDA by intentionally misreporting data about borrowers’ race, ethnicity, and gender. The lender was required to pay a civil money penalty and improve its HMDA policies and procedures.
When Freedom submitted its 2021 HMDA data, “widespread and significant” errors were found, including the improper classification of loan applications, inaccurate purchaser type, and inaccurate calculations. The Bureau uncovered 51 errors in seven different data fields when sampling 159 files.
The company was ordered to re-submit the data and when it did, Freedom corrected errors in 35 different fields, reflecting errors in 174,000 data entries that affected nearly 20% of the company’s 700,000 mortgage loan applications.
“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, in a statement. “The CFPB will continue to focus on ending the cycle of misconduct by repeat offenders in the financial industry.”
