Freedom Mortgage (FM) Corp. would have to pay a $3.95 million fine and carry out regular auditing and testing of its loan data under a proposed order by the Consumer Financial Protection Bureau (CFPB).
FM submitted “error-riddled” mortgage loan data to federal regulators after being sued last year by the CFPB for similar failings. Additionally the company violated the Home Mortgage Disclosure Act (HMDA) and a 2019 order, the agency announced a press release Tuesday.
“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 Rohit Chopra, CFPB director, in the release.
The details: In 2019, FM agreed to a consent order with the CFPB requiring it to create a compliance plan to prevent further violations of the HMDA.
From 2014-17, the company allegedly imputed inaccurate data of applicants’ race or ethnicity in violation of the HMDA. According to the 2019 consent order, when applicants did not specify their race or ethnicity in applications, FM loan officers were told to logged their race or ethnicity as non-Hispanic/white, regardless of whether that was accurate.
Compliance considerations: Under the new proposed order, FM would have to establish new compliance/auditing procedures and policies for a period of five years.
The CFPB proposed that FM must create and record its full compliance with each provision of the order, including adherence to the compliance plan, providing records of all submissions to its HMDA compliance subcommittee, and recording and retaining all minutes of the subcommittee meetings related to the proposed order, the CFPB said.
FM must also retain all records showing its internal and external audit reviews and testing related to its HDMA reporting, along with records showing that the results of the reviews have been presented to the subcommittee.
Earlier this month, the CFPB warned it intends to crack down on recidivist nonbank financial companies and require them to register.
Within 14 days, FM must provide any additional compliance reports to the CFPB and allow the agency to interview any employee or affiliate.
FM could not be reached for comment.
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