The Consumer Financial Protection Bureau (CFPB) has issued a proposed $3.95 million fine against Florida-based mortgage lender Freedom Mortgage. The CFPB previously sued Freedom Mortgage in October 2023 after the company was found to have submitted inaccurate mortgage data to federal regulators during 2020.
Freedom Mortgage is described as the third-largest loan originator in the United States; in 2020, Freedom reported on 700,000 loans and applications, 400,000 of which fell under the Home Mortgage Disclosure Act, which requires financial institutions to report on mortgage data to federal regulators.
The CFPB, which has also recently taken action against “junk fees” in the mortgage space, considers Freedom Mortgage to be a repeat offender. In 2019, Freedom Mortgage was found to have submitted inaccurate data throughout 2014 to 2017. The company’s current charge stands in violation of not just the Home Mortgage Disclosure Act and CFPB rules, but also the 2019 order the CFPB issued against Freedom after their initial inaccurate reporting was discovered.
The CFPB’s 2019 order documents show how Freedom Mortgage officers—when faced with an applicant who did not wish to disclose their race/ethnicity—put down the applicant as “non-Hispanic white.” The order suggests this practice was done to get around the record-keeping system’s “hard stop,” which prevents applications from advancing or being saved if certain information is detected as missing from them.
“This practice of selecting non-Hispanic white when a customer did not provide race and ethnicity over the phone was not limited to a specific location, loan officer, or time period,” the CFPB’s 2019 report states.
The CFPB’s 2019 order mandated that Freedom Mortgage take corrective measures to ensure accurate reporting in the future. The agency’s 2023 lawsuit claimed that the lender had failed to implement these measures, resulting in further inaccuracies. Cited inaccuracies in Freedom’s 2021 reporting include:
- “Improper classification of certain loan applications as ‘approved but not accepted’ that were actually withdrawn, causing errors in other related fields.”
- “Errors in entering data related to subordinate lien loans and purchased loans.”
- “Loans reported in HMDA that did not meet the HMDA definition of reportable application.”
- “Inaccurate purchaser type for tens of thousands of loans.”
- “Inaccurate calculations of rate spread, causing errors in other related fields.”
- “Inaccurate data reported for lender credits.”
“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 CFPB Director Rohit Chopra in the agency’s release. “The CFPB is making sure that Freedom Mortgage pays for their actions as well as institutes guardrails to prevent future violations.”
The $3.95 million fine, if it goes through, would be allocated into the CFPB’s victims relief fund. Freedom Mortgage would also be subject to closer scrutiny/audits going forward to ensure accuracy in their self-reporting of mortgage data.
As of publication time, Freedom Mortgage had not responded to RISMedia’s request for comment.
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