Bank of America was fined $12 million yesterday by the Consumer Financial Protection Bureau for not reporting data about the race, ethnicity, and sex of individuals obtaining mortgage loans from the mega-bank, instead choosing to lie and say that the consumers were unwilling to provide that information.
The Background: The Home Mortgage Disclosure Act, a federal law, requires lenders to report data about mortgage applications and originations to the federal government. The data makes sure that lenders are not discriminating or engaging in questionable lending patterns.
- How did the CFPB figure out BofA employees were submitting false data? Well, when hundreds of loan officers report that 100% of mortgage applicants chose not to disclose their demographic data over a three-month period, that raised some red flags. In most cases, the bank’s employees weren’t even asking for the information; they were just recording that the individuals were choosing not to provide it. The company stopped monitoring this step in 2016, and by 2020, the not-provided rates for race and ethnicity jumped from 6% to 17%.
- The CFPB also found that BofA knew that this was happening as early as 2013, “but turned a blind eye for years” rather than try to address it.
The Penalty: BofA will pay a $12 million fine to the CFPB’s Civil Money Penalty fund.
- It will also have to take steps to ensure that future mortgage data is reported properly.
- Going back to 2014, this is the fifth enforcement action taken against Bank of America by federal regulators. Those orders have totaled $1.2 billion in fines.
