Bank of America will pay a $12 million penalty for allegedly reporting false mortgage lending data to the federal government, under a settlement reached with the Consumer Financial Protection Bureau (CFPB).

Bank of America loan officers failed to ask applicants certain demographic questions like race, ethnicity, and sex, as required by the Home Mortgage Disclosure Act (HDMA). Those loan officers then reported the applicants failed to respond, the CFPB said Tuesday in a press release. Bank of America allegedly used that information to fulfill its HDMA reporting requirements.

The details: During a three-month period in 2020, 113 Bank of America loan officers reported on 100 percent of the mortgage applications they processed that applicants had chosen not to provide the demographic information, according to the CFPB’s consent order. Another 290 loan officers were later found to have recorded that 100 percent of their applicants had chosen not to provide the information in applications they took over a three-month period within the years 2016-21.

The CFPB said Bank of America failed to adequately ensure mortgage officers were accurately collecting and reporting the data, as required by the law. Some loan officers taking mortgage applications over the phone were failing to collect the data as far back as 2013, but the bank “turned a blind eye for years despite knowledge of the problem,” according to the agency,

Compliance considerations: Bank of America launched an internal investigation into its HMDA data collection practices, following a 2020 consumer complaint.

The bank found it discontinued its monthly monitoring of information-not-provided rates in 2016 and that the rate had increased from 6 percent to 17 percent by the beginning of 2020, per the CFPB.

The bank reinstated monthly monitoring in 2020 and provided additional training to loan officers, reminding them the collection of demographic information on loan applicants was not optional. In 2021, Bank of America began recording and auditing certain calls between loan officers and applicants.

Bank response: “We properly collected demographic data in more than 99 percent of applications in the years reviewed by the CFPB and consistently had lower percentages of applicants not disclosing their race compared to annual industry averages,” Bank of America said in an emailed statement. “As the CFPB notes, we took additional steps in 2020 and 2021 to enhance our monitoring and training to ensure employees ask applicants for required racial, ethnic, and gender information. This data collection issue had no impact on applications.”