The Consumer Financial Protection Bureau (CFPB) has filed a proposed order that would require Freedom Mortgage Corporation to pay a $3.95m penalty for submitting error-riddled mortgage loan data to federal regulators.

In October 2023, the CFPB sued the nonbank mortgage company for violating both the Home Mortgage Disclosure Act (HMDA) and a 2019 CFPB order. In addition to the civil money penalty, if entered by the court, the proposed stipulated judgment and order will require Freedom Mortgage to regularly audit, test, and correct the company’s HMDA data.

“Freedom Mortgage is a repeat offender. It has ignored requirements to submit accurate data that help federal regulators maintain a fair home lending market,” said CFPB Director Rohit Chopra.

“The CFPB is making sure that Freedom Mortgage pays for their actions and institutes guardrails to prevent future violations.”

Freedom Mortgage Corporation is a privately held non-bank mortgage loan originator and servicer headquartered in Boca Raton, Florida. In 2020, Freedom reported HMDA data on over 700,000 mortgage loan applications. It originated nearly 400,000 HMDA-reportable loans worth almost $100bn.

The CFPB is proposing today’s order because Freedom Mortgage has submitted incorrect mortgage data in violation of HMDA, the 2019 order, and the Consumer Financial Protection Act. Freedom Mortgage’s HMDA data submission for 2020 contained widespread errors across numerous data fields because of systemic problems with its compliance management systems. The company’s HMDA violations occurred while Freedom Mortgage was subject to the 2019 law enforcement order.

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Enforcement action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against non-bank financial institutions. This includes non-bank mortgage companies, for violating consumer financial protection laws, regulations, and orders, such as the CFPB’s 2019 order.

Since 2021, the CFPB has dramatically increased its focus on repeat offenders, including entities and individuals that violate CFPB orders. The CFPB established a Repeat Offenders Unit to ensure that companies are not repeatedly violating the law. The agency has taken a substantial number of law enforcement actions against large repeat offenders. In addition, the CFPB finalised a rule to create a new registry. This will compile consumer protection law enforcement orders by federal, state, and local law enforcement agencies.