By The newspaper
Nov 29, 2023, 00:41 AM EST
Bank of America has agreed to a $12 million settlement to resolve charges brought by the U.S. Consumer Financial Protection Bureau (CFPB).
The second-largest bank in the United States allegedly submitted inaccurate information about mortgage applicants, violating a crucial housing law, according to Yahoo Finance.
The CFPB accused Bank of America of systematically providing misleading information about mortgage applicants to the federal government, in an alleged violation spanning a period from 2016 to 2021 and involving more than 400 loan officers.
The crux of the issue revolves around the bank’s failure to ask mandatory questions about applicants’ race, ethnicity and gender and then falsely reporting that applicants chose not to answer.
Violation of the Home Mortgage Disclosure Act
At the center of the charges is violation of the Home Mortgage Disclosure Act, a landmark 1975 law designed to help regulators evaluate whether lenders are meeting housing needs in their communities.
Accurate reporting of demographic data is crucial to ensuring transparency and preventing discriminatory lending practices. Bank of America neither admitted nor denied wrongdoing, but agreed to the $12 million civil penalty.
For its part, Bank of America, based in Charlotte, North Carolina, responded to the accusations by stating that it correctly collected demographic data more than 99% of the time.
The bank highlighted its proactive approach by notifying the government after receiving a complaint in 2020. Additionally, it emphasized the implementation of enhanced training protocols to ensure employees consistently collect required data from mortgage applicants.
CFPB Director Statement
CFPB Director Rohit Chopra, in response to the settlement, emphasized the need for additional measures to ensure Bank of America’s compliance with the law, according to a press release.
Although the bank accepted the fine, the regulatory body remains vigilant in the application of the Home Mortgage Disclosure Act. Chopra’s statement underscores the CFPB’s commitment to upholding fair lending practices and preventing financial institutions from violating housing laws.
Bank of America’s $12 million fine and regulatory scrutiny shows the importance of accurate reporting in the mortgage lending industry.
Since the Mortgage Disclosure Act serves as a cornerstone for fair lending practices, this case resonates throughout the financial sector. It sparks a broader conversation about the role of major banks in ensuring transparency and non-discriminatory practices in their lending operations.
As it faces regulatory challenges, Bank of America’s latest quarterly report reveals information about its consumer lending business.
Originating $15.5 billion in first mortgages between January and September, the bank saw a 61% drop compared to the previous year, attributed primarily to fluctuations in interest rates.
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