CFPB Files Proposed Order Requiring Freedom Mortgage to Pay $3.95 Million Penalty for Repeat HMDA Violations

The Consumer Financial Protection Bureau filed a proposed court order on 18 June 2024 requiring Freedom Mortgage Corporation to pay a civil money penalty of $3.95 million for submitting inaccurate mortgage loan data to federal regulators. The action marks the second time the Boca Raton, Florida-based lender has been found in violation of its obligations under the Home Mortgage Disclosure Act since a prior enforcement action taken against the company in 2019. The proposed order was filed pursuant to the Consumer Financial Protection Act.

Freedom Mortgage Corporation is a nonbank residential mortgage originator and servicer.

A SECOND HMDA VIOLATION SINCE 2019 ACTION

The HMDA requires financial institutions engaged in mortgage lending to collect, report and publicly disclose detailed data about their loan applications, originations and purchases, including information about the characteristics of borrowers and the properties involved. The data is used by the CFPB and other federal agencies to examine whether lenders are serving all segments of the population equitably and to identify patterns that may indicate discriminatory lending practices. Freedom Mortgage's failure to meet the data accuracy standards required under HMDA for a second time since 2019 is what the CFPB said warranted both a financial penalty and structural remedial measures.

The filing came shortly after the CFPB finalised a new repeat offender registry rule on 3 June 2024, which requires nonbank financial companies that have violated consumer financial protection laws to register with the Bureau.

INJUNCTIVE RELIEF AND ONGOING AUDIT OBLIGATIONS

Beyond the $3.95 million civil money penalty, the proposed court order imposes injunctive relief on Freedom Mortgage requiring the company to establish regular auditing and testing processes for its HMDA data submissions and to implement corrective procedures to address any inaccuracies identified before the data is reported to regulators. If entered by the court, the injunctive component would be legally binding on Freedom Mortgage.

The CFPB described the enforcement action in a statement published on its website, emphasising the importance of accurate HMDA data to the agency's fair lending oversight work and to the public interest more broadly. CFPB Director Rohit Chopra said Freedom Mortgage was "a repeat offender that has ignored requirements to submit accurate data that help federal regulators maintain a fair home lending market".