WASHINGTON, D.C. (October 10, 2023) — The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court today, alleging that Freedom Mortgage Corporation submitted legally-required mortgage loan data that was riddled with errors. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals.
“The CFPB is suing Freedom Mortgage for violating a law enforcement order and for providing false data on its mortgage operations,” said CFPB Director Rohit Chopra. “The CFPB will continue to focus on ending the cycle of misconduct by repeat offenders in the financial industry.”
Freedom Mortgage Corporation is a privately held nonbank mortgage loan originator and servicer headquartered in Boca Raton, Florida. In 2020, Freedom reported HMDA data on over 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion.
Under HMDA, mortgage lenders are required to report information about loan applications and originations to the CFPB and other federal regulators. HMDA data are the most comprehensive source of publicly available information on the U.S. mortgage market. The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities, and to identify possible discriminatory lending patterns.
In 2019, the CFPB found that Freedom Mortgage had intentionally misreported HMDA data about applicants’ race and ethnicity. For example, certain loan officers were told by managers or other loan officers that when applicants did not provide their race or ethnicity, they should select non-Hispanic white regardless of whether that was accurate. The 2019 order required Freedom to pay a $1.75 million penalty, improve its compliance management system, and avoid future HMDA violations.
The lawsuit filed today alleges that the HMDA data Freedom submitted for 2020 contained widespread errors across multiple data fields, and that the errors constitute violations of HMDA, the Consumer Financial Protection Act, and the 2019 order.
Specifically, the CFPB alleges:
Enforcement Action
Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against financial institutions violating consumer financial laws, including HMDA. The lawsuit seeks to stop Freedom’s alleged unlawful conduct and for it to pay a civil money penalty which will be deposited in the CFPB’s victims relief fund.
Consumers can also submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
Employees of companies who they believe their company has violated federal consumer financial laws are encouraged to send information about what they know to whistleblower@cfpb.gov.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.
Office of Communications
press@cfpb.gov
