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New Jersey-based Freedom Mortgage must update its procedures for complying with fair lending laws as part of a consent order with the Massachusetts Division of Banks.
The consent order, issued on July 30, focuses on the mortgage lender’s compliance with the Home Mortgage Disclosure Act, the federal law that helps the government to determine whether lenders meet communities’ needs and to identify possible patterns of lending discrimination.
The new settlement between the DOB and Freedom Mortgage, which has an office in Oxford, replaces a consent order issued in 2016 after the DOB performed compliance and Community Reinvestment Act examinations that found issues with Freedom Mortgage’s operations.
The updated consent order also follows one issued last year by the Consumer Financial Protection Bureau. The CFPB said that Freedom Mortgage had submitted HMDA data with errors between 2014 and 2017.
“The Bureau found that Freedom reported inaccurate race, ethnicity and sex information and that much of Freedom’s loan officers’ recording of this incorrect information was intentional,” the CFPB said in a May 2019 statement. “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.”
Federal law does not require CRA examinations for non-bank mortgage lenders, but Massachusetts has its own Mortgage Lender Community Investment statute for evaluating compliance with fair lending laws and consumer protection regulations.
The DOB issued Freedom Mortgage a CRA rating in 2015 of NI (needs to improve). According to the consent order issued last week, the DOB did another CRA examination in February 2019.
“Freedom Mortgage could not confirm the accuracy of the HMDA data provided to the Division, and therefore, the Division determined that it could not complete a CRA examination or evaluate Freedom Mortgage’s compliance with fair lending laws,” the DOB said in the consent order.
The consent order requires Freedom Mortgage to establish procedures for complying with HMDA requirements, including regularly auditing HMDA data integrity and addressing all errors. The company must also ensure that personnel understand HMDA reporting requirements and pay the DOB a $25,000 administrative penalty.
The DOB agreed not to suspend or revoke Freedom Mortgage’s license in Massachusetts.
Freedom Mortgage accepted the consent order to settle the matter, the order said, “without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a mortgage lender and mortgage broker.” Freedom also did not admit violations in the consent order with the CFPB.
