CFPB fines Bank of America $12 million for mortgage violations

A man walks past an ATM outside Bank of America Corp. headquarters in Charlotte, North Carolina, May 2, 2016.

Chris Keane | Bloomberg | Getty Images

WASHINGTON — The Consumer Financial Protection Bureau on Tuesday fined Bank of America $12 million for reporting false mortgage lending data to the federal government.

“Bank of America violated a federal law that thousands of mortgage lenders have routinely followed for decades,” CFPB director Rohit Chopra 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.”

Bank of America did not admit or deny any of the facts or findings in the CFPB consent order.

According to a CFPB consent order, Bank of America violated part of the 1975 Home Mortgage Disclosure Act (HMDA) that requires lenders to accurately report demographic data about mortgage applications to financial regulators. Data collected under the law can expose potentially discriminatory lending practices.

Starting in 2020, Bank of America identified hundreds of distributed loan officers, each of whom did not ask for demographic data, including race, ethnicity, and sex — then falsely reported that applicants declined to provide it — for at least one three month period between 2016 and 2021, the consent order said.

The violations by the loan officers began occurring as early as 2013 for loan applications collected by phone, yet Bank of America failed to take appropriate action for at least four years and did not begin monitoring phone calls for its distributed loan officers until 2021, the CFPB found.

The Biden administration has prioritized tackling racial discrimination in housing and mortgage lending.

The CFPB settlement corresponded with a separate announcement the same day from the Justice Department that it has recovered $107 million in relief for communities targeted by illegal redlining, the practice by mortgage providers of not lending money to home buyers in certain areas, often communities of color.

Bill Halldin, a representative for the bank, disputed the four-year time frame but agreed that the violations took place over a span of three months.

Bank of America “properly collected demographic data in more than 99% of applications in the years reviewed by the CFPB,” said Halldin. But he acknowledged that some officers reported a rate of applicants who declined to disclose their race that was lower than the annual industry averages.

“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,” Halldin said. “This data collection issue had no impact on applications.”

The $12 million fine issued Tuesday will be paid to the CFPB’s victims relief fund.

Bank of America is among the largest mortgage lenders in the country. The bank reportedly funded $53.7 billion in first mortgage loans in 2021 through its digital application service.

The firm also employed over 4,500 loan officers, and averaged over 300,000 mortgage loan applications per year between January 2016 and the present day, the CFPB said.

Bank of America has come under fire from the CFPB before. In July, the bureau fined the banking giant $150 million for charging customers multiple junk fees, among other alleged violations.