Society & Lifestyle

CFPB Fines Bank of America

The Consumer Financial Protection Bureau (CFPB) applied to Bank of America a measure of material impact in the form of an obligation to pay $12 million for the involvement of this financial institution in the practice of providing incomplete data related to mortgage lending to the federal government.

CFPB Fines Bank of America

Hundreds of loan officers of the specified bank did not ask applicants for a mortgage loan certain demographic questions. This business practice does not comply with the requirements of the Home Mortgage Disclosure Act (HMDA). After a while, loan officers of one of the largest financial institutions in the American banking sector began to claim that the applicants chose in favor of not answering the mentioned questions. The relevant information is contained in the CFPB press release, which was published last Tuesday, November 28.

A spokesperson for Bank of America, in response to a media request for comments on the allegations by the regulator, stated that the financial institution implemented a proper and regulatory-compliant practice of collecting demographic data, noting that the relevant information was contained in 99% of applications for the years reviewed by the CFPB. The lender’s representative also said that the percentage of applicants who chose not to disclose their race was below the industry average.

CFPB stated that after receiving one complaint in 2020, a procedure for checking the bank’s activities was launched. The regulator also noted that the investigation was initiated by the government.

Separately, the CFPB noted that in 2020 and 2021, additional measures were taken to strengthen its monitoring and training to ensure that employees of financial institutions request the necessary gender, ethnic, and racial information from applicants. The regulator stated that the problem with data collection related to the practice of Bank of America did not become a factor influencing the applications.

The mentioned amount of $12 million is to be paid to the CFPB Victim Relief Fund. The relevant information is contained in the press release of the regulator.

CFPB Director Rohit Chopra said that Bank of America violated federal law, the requirements of which have been continuously fulfilled by thousands of mortgage lenders for decades. In this context, he separately noted that providing false information to federal regulators is an illegal act. Rohit Chopra also said that the CFPB will take additional measures to ensure the termination of Bank of America’s practices that do not comply with regulatory requirements.

The regulator’s press release notes that  provides for the obligation of mortgage lenders to report demographic information about loan applications and originations to the CFPB and other federal regulatory authorities, which use this data to identify possible cases of discrimination in the provision of relevant financial services.

The CFPB claims that Bank of America loan officers provided information for three months that 100% of mortgage applicants chose not to share demographic data. At the same time, the regulator stated that the employees of the mentioned financial institution did not ask their clients anything about gender, race, and ethnicity.

The CFPB also found that Bank of America was aware that many loan officers did not carry out the collection of demographic data provided for by regulatory requirements back in 2013, but did not react to it in any way.

In the order of the regulator, a separate item is the obligation of the mentioned financial institution to take measures to prevent the continuation of the illegal practice of providing information related to mortgage lending.

As part of another July lawsuit, CFPB Bank of America must pay fines of more than $250 million and reimburse customers. This measure of influence was applied due to the practice of a financial institution to systematically double-underestimate the fees charged to consumers with insufficient funds.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.