The Consumer Financial Protection Bureau (CFPB) announced $12 million in fines for Bank of America (BOA). Levied for falsely reporting mortgage lending dates to the feds, they blatantly cooked the books. Thus far, BOA has yet to admit or even deny the claims.
At the heart of the claims in the CFPB consent order are accusations that they violated the 1975 Home Mortgage Disclosure Act (HMDA). This act requires them to provide accurate information about the demographics of mortgage applications to financial regulators. According to the consent report, BOA found the issue themselves.
Back in 2020, they identified hundreds of distributed loan officers in their network who made massive errors. By failing to ask for demographic data, including sex, race, and ethnicity from applicants- they then falsely reported that applicants failed to turn it over. This occurred for a minimum of one three-month period from sometime between 2016 and 2021.
The evidence and report of this is simply astonishing. Given the amount of computers, data analytics, and reporting, there is no reason they don’t already know who did, how often, and when they did this. Record keeping for this kind of information has been in existence for decades.
Given the slow and uninspiring response from BOA over these allegations, it would seem that they are trying to keep the stock price cooked for investors. Given the propensity of the Biden administration to manipulate the market for their amusement, this shoe would fit very well. Noting that records of this happening date back to 2013 for loan applications by phone, they failed to remedy the issue.
Shockingly, it took until 2017 for any action, and until 2021 to start monitoring distribution loan officer call monitoring.
Yet, according to President Biden, eliminating racial discrimination in mortgage lending is a top priority for his administration. This was evidenced by a simultaneous announcement of $107 million in funds for communities that were targeted with illegal redlining practices. When put into place funds aren’t made available for buyers in specific neighborhoods, ones that also often tend to attract a higher minority population.
So far, BOA rep Bill Halldin has vehemently disputed the timeline of four years but said the practice lasted for three months. He annotated that they got things right 99% of the time, but reluctantly admitted some officers were higher than the industry average with clients who did not want their race disclosed.
Halldin said, “As the CFPB notes, we took additional steps in 2020 and 2021 to enhance our monitoring and training to ensure employees ask applicants for required racial, ethnic and gender information. This data collection issue had no impact on applications.”
This late $12 million fine will be paid directly to the CFPB victim’s relief fund. It also represents just a drop in the bucket for the company. As one of the biggest mortgage lenders in the US, they backed a reported $53.7 billion in first mortgage loans in 2021, just through their digital application service. Billions of deals like this take a massive work staff; with more than 4,500 loan officers, they stood ready to go. Processing over 300,000 mortgage applications per year since January 2016, they have a heavy volume of customers.
In July, the CFPB slammed BOA for predatory loan practices. Fining them $150 million then, they were brought up for charging multiple junk fees in their loans as well as multiple other alleged violations. In these allegations, they were found to be doing this based on a racial motive but ultimately didn’t do the damage they thought they had.
Getting fined like this when BOA is already one of the most hated and least trusted financial institutions in the US is an incredible feat. If they keep it up, they could end up going the way of Wachovia in the near future.
