Government regulator lets BofA mortgage off the hook 3 years early

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In its latest move to ease regulations, the Consumer Financial Protection Bureau (CFPB) has terminated a 2023 consent order with Bank of America aimed at addressing allegations that the lender reported false information about mortgage borrowers to federal regulators.

Bank of America was accused of failing to ask some mortgage applicants demographic questions about their race, ethnicity and gender as required by the Home Mortgage Disclosure Act (HMDA) — data that’s collected to uncover potential discriminatory lending patterns.

The CFPB claimed that in addition to failing to collect that demographic information from some borrowers, Bank of America falsely reported that the applicants had chosen not to respond.

Bank of America knew “that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but the bank turned a blind eye for years,” the CFPB alleged in announcing a $12 million settlement.

Under the terms of a Nov. 27, 2023, consent order, Bank of America also agreed to implement a compliance plan ensuring that it collected, recorded and reported required HMDA data used by the CFPB and other federal regulators to detect redlining.

While the consent order was to remain in effect for a minimum of five years — until late 2028, if no further reporting violations occurred — Office of Management and Budget Director Russell Vought on June 4 signed an order terminating it, saying Bank of America had fulfilled its obligations.

The CFPB did not publicize the action, which was first reported by Reuters this week. Bank of America declined Inman’s request for comment on the early termination of its consent order with the CFPB.

Bank of America mortgage originations, 2020-2024

Bank of America was the nation’s fifth-largest mortgage lender last year by dollar volume, with $29.5 billion in originations, according to an analysis of HMDA data by iEmergent.

Since the end of the pandemic-era refinancing boom fueled by low interest rates, most of the bank’s mortgage business has been with homebuyers, with $17.1 billion in purchase loans funded in 2024.

Regulatory rollback

Vought and his top deputy at OMB, Dan Bishop, are leading the Trump administration’s efforts to downsize the CFPB, with Vought serving a dual role as the bureau’s acting director.

The Trump administration, which is seeking to cut 90 percent of the CFPB’s workforce, has put about 20 active enforcement cases on hold and sought to vacate a number of settlements that the bureau reached under the Biden administration.

The acting director of the CFPB’s enforcement division, Cara Petersen, resigned on June 10, saying in a farewell email that “the bureau’s current leadership has no intention to enforce the law in any meaningful way.”

Two days later, U.S. District Judge Franklin Valderrama declined the CFPB’s motion to vacate a settlement it reached last year in a fair lending case involving Chicago mortgage broker Townstone Financial, saying that doing so “would erode public confidence in the finality of judgments.”

Vought had claimed that an internal review of the case determined that the CFPB “abused its power” in pursuing the case against Townstone in order to “further the goal of mandating DEI in lending.”

Consumer groups that defended the Townstone settlement in court called the CFPB’s request to vacate it “unprecedented,” and argued that granting it would establish a “dangerous and destabilizing precedent.”

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Email Matt Carter