Feds order Bank of America to pay $12 million for reporting false mortgage data

The Consumer Financial Protection Bureau said Tuesday it ordered Charlotte-based Bank of America to pay a $12 million penalty for submitting false mortgage lending information to the federal government.

The bank also was ordered to develop policies and procedures to ensure compliance with the Home Mortgage Disclosure Act. It requires mortgage lenders to report information to the CFPB and other federal regulators.

Data collected under the act is used for the U.S. mortgage market and to see if financial institutions are serving the housing needs of communities and to find possible discriminatory lending practices.

Hundreds of loan officers at Bank of America failed to ask applicants certain demographic questions required by federal law and then said the applicants declined to respond, according to the bureau’s Tuesday announcement. Those actions took place between 2016 and late 2020, the bureau stated. The applicants were not asked about race, ethnicity and gender, according to the the bureau’s order.

In a consent order between the bureau and the bank, Bank of America “did not admit or deny any findings of fact or conclusion of law” in the case.

Bank of America will have to pay millions to the bureau’s victim relief fund for filing false reports for at least four years.

“Bank of America violated a federal law that thousands of mortgage lenders have routinely followed for decades,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement. “It is illegal to report false information to federal regulators, and we will be taking additional steps to ensure that Bank of America stops breaking the law.”

In a statement to The Charlotte Observer, Bank of America said demographic data was collected in more than 99% of applications in the years reviewed by the bureau, and consistently had lower percentages of applicants not disclosing their race compared to annual industry averages.

“After receiving one complaint in 2020, we conducted a review and notified the government, which prompted this inquiry,” spokesman Bill Halldin told the Observer in a statement. “As the CFPB notes, we took additional steps in 2020 and 2021 to enhance our monitoring and training to ensure employees ask applicants for required racial, ethnic and gender information.”

The data collection issue had no impact on applications, Halldin said.

Bank of America took issue with how CFPB characterized the case in its news release. Halldin said there is nothing in the consent order that says hundreds of people failed to ask certain demographic questions for four years.

He noted that in the consent order, the CFPB cited a three-month period in 2020 involving 113 loan officers, and a three-month period between 2016 and 2021 with 290 officers, who recorded that mortgage applicants chose not to report their race or ethnicity in every application they took during that time.

“These and other loan officers were not asking applicants for their race, ethnicity, or sex. Instead, they were wrongly recording on applications that the applicants chose not to provide the information, which (Bank of America) then reported to the government each year,” the order stated.

The Consumer Financial Protection Bureau ordered Bank of America to pay a $12 million penalty for submitting false mortgage lending information to ​the ​federal government.
The Consumer Financial Protection Bureau ordered Bank of America to pay a $12 million penalty for submitting false mortgage lending information to ​the ​federal government.

Prior federal action against Bank of America

In July, the CPFB and the Office of the Comptroller of the Currency imposed $250 million in fines and restitution on Bank of America for what the consumer bureau said were actions that hurt “hundreds of thousands of consumers” by illegally charging junk fees, withholding credit card rewards and opening fake accounts.

Bank of America agreed to a consent order without admitting or denying any wrongdoing in that case.

The CFPB and OCC took action against the bank twice last year. The first involved instance botched disbursement of state unemployment benefits. Bank of America was ordered to pay $225 million in fines and refunded hundreds of million of dollars to consumers.

Later that year, Bank of America paid a $10 million penalty for unlawful garnishments of customer accounts.

Bank of America has more than 19,000 employees in the Charlotte region, part of 213,000 workers companywide. As of June, it had $2.4 trillion in assets, and was the second-largest bank in the United States.