The Consumer Financial Protection Bureau (CFPB) said on Tuesday that it had fined Bank of America $12m for reporting false mortgage lending data to the federal government.

“Bank of America violated a federal law that thousands of mortgage lenders have routinely followed for decades,” CFPB director Rohit Chopra said in a statement. “It is illegal to report false information to federal regulators, and we will be taking additional steps to ensure that Bank of America stops breaking the law.”

Bank of America did not admit or deny any of the facts or findings in the CFPB consent order.

According to a CFPB consent order, the bank violated part of the Home Mortgage Disclosure Act (HMDA), which requires lenders to accurately report demographic data about mortgage applications to financial regulators. 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.

False reporting and inaction

The CFPB said hundreds of Bank of America loan officers reported that 100% of mortgage applicants chose not to provide their demographic data over at least a three month period. In fact, loan officers in its distributed lending channel were not asking applicants for demographic data, but instead were falsely recording that the applicants chose not to provide the information, the CFPB said.

Bank of America did not ensure that these mortgage loan officers accurately collected and reported the demographic data required under HMDA.

For example, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but it turned a blind eye for years despite knowledge of the problem, the CFPB said.

Monitoring, auditing and flagging

In 2023, the bank had created a monthly report to monitor the rate at which individual loan officers reported that applicants did not want to provide their race or ethnicity. The bank only applied this monitoring program to certain loan officers, but it did bring that rate down.

In 2016, the bank discontinued this monthly monitoring, and the rates began to steadily rise.

The CFPB’s order asks the bank to describe the steps its board has taken to reasonably assess whether the bank is complying with the compliance plan it has drafted to remediate its compliance program deficiencies.

Race, ethnicity and gender

After receiving a single customer complaint regarding the collection of data on race, ethnicity, and sex, the bank reviewed its HMDA data collection practices and found the notations on applications that the applicants had chosen not to provide the information. To address this issue, in 2020 the bank:

1. re-initiated its monthly monitoring of information-not-provided rates;
2. provided training reminding loan officers that the collection of race, ethnicity, and sex information is not optional and that employees must always read the HMDA Disclosure and all race, ethnicity, and sex options;
3. opened a self-identified audit issue and self-reported the existence of the audit issue to the government.

In 2021, Bank of America began recording and auditing calls for loan officers in the distributed lending channel for the first time. And in 2023, the bank began directing loan officers to identify through an electronic flag any call on which the loan officer collected an applicant’s race, ethnicity, and sex.

But when the bank audited those calls, it found that some loan officers were still not actually requesting race, ethnicity, and sex information on the calls, even though they flagged them. The bank said it disciplined certain loan officers as a result.

CFPB prior actions

The CFPB’s order asks the bank to describe the steps its board (or board committee) has taken to reasonably assess whether the bank is complying with the plan it has drafted to remediate its compliance program deficiencies. It notes in detail whether and how it has complied with the plan and verified that its corrective actions are sufficient.

The CFPB has taken action against Bank of America previously. In an action taken this year, the CFPB and the Office of the Comptroller of the Currency (OCC) ordered the bank to pay over $200m for illegally charging junk fees, withholding credit card rewards, and opening fake accounts.

In 2022, the CFPB and OCC ordered the bank to pay $225m in fines and refund hundreds of millions of dollars to consumers for botched disbursement of state unemployment benefits.