CFPB Fines Freedom Mortgage for HMDA Violations

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Freedom Mortgage will pay a $1.75 million fine and must take steps to improve its compliance in order to settle allegations by the Consumer Financial Protection Bureau (CFPB) that the lender – one of the largest in the country – violated the Home Mortgage Disclosure Act (HMDA) and Regulation C, which implements that Act.

Specifically, the CFPB alleges that from 2014 to 2017 Freedom Mortgage submitted mortgage data to the HMDA database that contained errors including inaccurate race, ethnicity and sex information.

An investigation by the CFPB further found that some of Freedom’s loan officers recorded this incorrect information intentionally.

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.

During the period in question, Freedom Mortgage originated more than 50,000 loans, including refinances.

Last week, Freedom Mortgage and RoundPoint Mortgage Servicing Corp. announced a merger agreement in which RoundPoint will become a wholly-owned subsidiary of Freedom Mortgage.

RoundPoint currently services and subservices approximately $91 billion in unpaid mortgage assets comprised primarily of agency loans.

Following the merger, Freedom Mortgage’s combined owned and subserviced mortgage servicing rights (MSR) portfolio is expected to be in excess of $300 billion.

The merger also provides Freedom Mortgage with an active subservicing platform and broadens the scope of the company’s co-issue origination network.

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