Bank of America fined $12 million by CFPB over misreported mortgage data

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Bank of America fined $12 million by CFPB over misreported mortgage data
Credit: © Reuters.

The Consumer Financial Protection Bureau (CFPB) has imposed a $12 million fine on Bank of America (NYSE: BAC ) for its failure to collect and for falsifying demographic information during the mortgage application process, as required by federal law. This violation dates back to phone applications in 2013 but was only rectified with enhanced monitoring and training by 2021. The bank's loan officers reportedly did not ask for details regarding race, ethnicity, and sex from applicants and inaccurately reported these as non-responses.

CFPB Director Rohit Chopra announced the enforcement action on Tuesday, emphasizing the importance of compliance measures to rectify the mortgage application procedures and to prevent such legal violations in the future. The fine is the result of a complaint lodged in 2020, which triggered an internal review by the bank and a subsequent investigation by the CFPB.

While Bank of America, headquartered in Charlotte, has agreed to the consent order, the bank has not admitted to the allegations. However, it has acknowledged that since the complaint, it has implemented procedural enhancements to improve monitoring and training.

Bank of America's spokesperson Bill Halldin confirmed that despite some inaccuracies reported over three months, Bank of America's digital application service captured correct demographic information in most cases which did not influence loan approvals. The bank asserts that the issues with data collection did not influence the decision-making process for mortgage applications.

The imposed fine will aid the CFPB's victims relief fund. This is not the first punitive measure by the CFPB; they were previously fined $150 million for imposing unwarranted junk fees on their customers. This action is in line with the Justice Department's recovery of $107 million in relief for communities that faced illegal redlining activities.

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