The Consumer Financial Protection Bureau (CFPB) has recently ordered Bank of America to pay a substantial $12 million penalty for providing false mortgage lending information to the federal government. This enforcement action underscores the regulatory scrutiny financial institutions face in upholding federal laws and the importance of accurate reporting in the mortgage industry.
Bank of America was found to have violated the Home Mortgage Disclosure Act (HMDA) by submitting inaccurate information about mortgage applicants. Specifically, the CFPB highlighted that over 400 loan officers at Bank of America, the second-largest bank in the U.S., failed to ask applicants required questions about their race, ethnicity, and sex. Subsequently, these officers falsely reported that the applicants had chosen not to provide this information. The HMDA, enacted in 1975, is a critical piece of legislation that aids regulators in assessing whether lenders are meeting their communities’ housing needs and steering clear of discriminatory lending practices.
The fine, covering alleged misconduct between 2016 and 2021, was agreed upon without Bank of America admitting or denying the wrongdoing. This penalty underscores the regulatory focus on ensuring compliance with laws designed to prevent discriminatory lending practices and promote fair housing. The CFPB has emphasized the need for accurate demographic data collection as a tool for monitoring and addressing potential biases in lending practices.
CFPB Director Rohit Chopra stated that additional steps would be taken to prevent further violations by Bank of America. In response, the bank, headquartered in Charlotte, North Carolina, claimed that it had accurately collected demographic data in more than 99% of instances. Following a complaint received in 2020, the bank reported its findings to the government and stated that it has since improved training to ensure compliance with data collection requirements. This statement reflects the bank’s efforts to address the identified shortcomings and its commitment to adhering to regulatory standards.
The CFPB’s action against Bank of America is a clear message to financial institutions about the importance of adhering to federal laws and regulations, especially those designed to ensure fair and equitable treatment in the housing market. This penalty not only addresses past violations but also serves as a deterrent against future non-compliance, reinforcing the role of regulatory agencies in maintaining the integrity of financial markets and protecting consumer rights.
