Mortgage Broker
Freedom Mortgage CorporationHeadquarters
Information and Alerts
Alert Details
This business has 2 alerts.
Government Actions 1
CFPB ADMINISTRATIVE PROCEEDING File No. 2023-CFPB-0008
As of August 17, 2023
CFPB Penalizes Freedom Mortgage and Realty Connect for Illegal Kickbacks
Lender provided incentives to Realty Connect and other brokerages in exchange for mortgage referrals
The Consumer Financial Protection Bureau (CFPB) took action against Freedom Mortgage Corporation (Freedom) for providing illegal incentives to real estate brokers and agents in exchange for mortgage loan referrals. Freedom provided real estate agents and brokers with numerous incentives — including cash payments, paid subscription services, and catered parties — with the understanding they would refer prospective homebuyers to Freedom for mortgage loans. This conduct violated the Real Estate Settlement Procedures Act and its implementing regulation. The CFPB is ordering Freedom to cease its illegal activities and pay $1.75 million into the CFPB’s victim relief fund. The CFPB separately issued an order against a real estate brokerage firm, Realty Connect USA Long Island (Realty Connect), for accepting numerous illegal kickbacks from Freedom. Realty Connect will pay a $200,000 penalty and cease its unlawful conduct.
The Real Estate Settlement Procedures Act helps reduce closing costs for homebuyers and increases competition in the marketplace by prohibiting mortgage loan originators from offering referral incentives and kickbacks to other companies in exchange for referring homebuyers.
The CFPB found Freedom and Realty Connect violated the Real Estate Settlement Procedures Act. The specific violations include:
Paying for referrals through illegal marketing service arrangements: Freedom entered into marketing services agreements with over 40 real estate brokerages where Freedom made monthly payments totaling approximately $90,000 to brokerages in exchange for the brokerages’ marketing services. However, Freedom used these marketing services agreements as a way to pay for mortgage referrals, rather than compensate the brokerages for marketing services they actually performed. Realty Connect received $6,000 per month from Freedom, but failed to perform many of the marketing tasks required under the agreement.
Offering premium subscription services free of charge: Freedom gave real estate brokers and agents free access to valuable industry subscription services, which provided information concerning property reports, comparable sales, and foreclosure data. Freedom paid thousands of dollars per month for one of the subscription services, and Freedom provided access to over 2,000 agents for no cost. Freedom often required real estate agents and brokers to agree to be paired with a Freedom loan officer before Freedom would give them access to its subscription services. Since 2017, the real estate agents who received free access to these subscription services—including agents at both Realty Connect and other brokerages—made more than 1,000 mortgage referrals to Freedom.
Hosting and subsidizing company events and providing gifts: Freedom hosted parties and other events for real estate agents and brokers, including events held exclusively for Realty Connect brokers and agents. Freedom paid for the food, beverages, alcohol, and entertainment. Freedom would also sometimes give free tickets to sporting events, charity galas, or other events where the agents and brokers would have otherwise needed to pay their own way. Freedom also denied requests for event sponsorship from real estate brokerages that did not refer mortgage business to Freedom’s loan officers.
Enforcement Action
The CFPB found that Freedom and Realty Connect violated the Real Estate Settlement Procedures Act by exchanging items of value in return for mortgage loan referrals.
The orders announced today require Freedom and Realty Connect to:
Cease illegal activities: Freedom is prohibited from providing anything of value to other entities in exchange for mortgage referrals. Realty Connect is prohibited from accepting items of value in exchange for mortgage referrals.
Pay nearly $2 million in penalties: Freedom will pay a $1.75 million penalty into the CFPB victims relief fund. Realty Connect will also pay a $200,000 civil money penalty.
LINK: https://www.consumerfinance.gov/about-us/newsroom/cfpb-penalizes-freedom-mortgage-and-realty-connect-for-illegal-kickbacks/
Government Actions 2
Consumer Financial Protection Bureau, vs Freedom Mortgage Corporation.9:23-cv-81373 SD Fla
As of June 24, 2024
A Stipulation and Final Order has been issued in this case as follows:
While not admitting or denying the allegations, Freedom Mortgage Corporation agrees to not violate the provisions of the Home Mortgage Disclosure Act. In addition, Freedom Mortgage Corporation must pay a civil penalty of 3.95 million dollars to the Consumer Finance Protection Board.
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As of October 10, 2023
The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in
federal court, alleging that Freedom Mortgage Corporation
submitted legally-required mortgage loan data that was riddled with
errors. The CFPB alleges that Freedom’s practices violate both the Home
Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals.
Freedom Mortgage Corporation is a privately held nonbank mortgage loan
originator and servicer headquartered in Boca Raton, Florida. In 2020,
Freedom reported HMDA data on over 700,000 mortgage loan applications
and originated nearly 400,000 HMDA-reportable loans worth almost $100
billion.
Under HMDA, mortgage lenders are required to report information about
loan applications and originations to the CFPB and other federal
regulators. HMDA data are the most comprehensive source of publicly
available information on the U.S. mortgage market. The public and
regulators can use the information to monitor whether financial
institutions are serving the housing needs of their communities, and to
identify possible discriminatory lending patterns.
The lawsuit filed alleges that the HMDA
data Freedom submitted for 2020 contained widespread errors across
multiple data fields, and that the errors constitute violations of HMDA,
the Consumer Financial Protection Act, and the 2019 order.
Specifically, the CFPB alleges:
- Freedom reported information to regulators with widespread inaccuracies:
After the CFPB found 51 errors in an initial review of 159 files in
Freedom’s 2020 submission, the company had to resubmit its data. In that
resubmission, Freedom corrected errors in 35 different required HMDA
data fields—this reflects errors in over 174,000 data entries affecting
nearly 20 percent of Freedom’s mortgage loan applications. - Freedom violated a 2019 law enforcement order:
Freedom was ordered in 2019 to clean up its deficient data practices,
but failed to do so. Instead, it continued to provide federal regulators
with error-ridden data.
LINK: https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-repeat-offender-freedom-mortgage-corporation-for-providing-false-information-to-federal-regulators/
Important Information
Government Actions
As of July 11, 2023:
Attorney General Matthew J. Platkin and the Division of Consumer
Affairs announced that a nationwide mortgage provider formerly
based in New Jersey has agreed to a $502,000 settlement to resolve
allegations that it violated the state’s consumer protection laws in the
sale and servicing of mortgages throughout the State and beyond.
Freedom Mortgage Corp. (“Freedom Mortgage”), which maintained its
headquarters in Mount Laurel, NJ, for more than a decade before moving
to Florida in 2022, allegedly bombarded consumers with harassing sales
calls about loan refinancing, engaged in bait-and-switch sales tactics
to induce them to refinance their loans, and caused them financial harm
by repeatedly failing to meet its responsibilities as a loan servicer.
The allegations stem from the Division’s review of more than 1,400
complaints from around the nation, both obtained through the Better
Business Bureau and filed directly with the Division, involving conduct
that occurred from January 2015 to June 2022.
In a Consent Order, Freedom Mortgage and the Division
agreed to resolve the allegations and conclude the investigation without
further action.
Under the terms of the settlement, Freedom Mortgage will pay $365,200
in civil penalties and $136,800 in reimbursement for the Division’s
attorneys’ fees and investigative costs. An additional $50,000 in civil
penalties is suspended but will become immediately payable if Freedom
Mortgage fails to comply with the settlement terms within the next year.
The settlement also provides that any consumer complaint received by
the Division within the next year be forwarded to Freedom Mortgage for
resolution and, if not resolved, to the Division’s Alternative Dispute
Resolution Unit for binding arbitration. Additionally, within 30 days of
the filing of the Consent Order, Freedom Mortgage must designate an
employee to serve as the company’s Complaint Coordinator for a period of
18 months. During this time, the Complaint Coordinator will be
responsible for ensuring Freedom Mortgage complies with the terms of the
Consent Order and all applicable consumer protection laws and
regulations. The Complaint Coordinator will also be responsible for
providing the Division with written quarterly reports summarizing
additional complaints received or resolved by Freedom Mortgage.
The Division found that Freedom Mortgage violated the New Jersey
Consumer Fraud Act (“CFA”), the Advertising Regulations, and the
Telemarketing Do Not Call Law and related regulations by:
- making unsolicited telemarketing sales calls to consumers despite not being registered with the Division as a telemarketer;
- engaging in abusive and deceptive telemarketing practices, primarily involving multiple refinancing solicitations;
- engaging in “bait-and-switch” sales tactics, such as inducing
consumers to refinance their loans at lower rates only to raise the
rates after consumers sign the refinancing documents; - failing to timely disburse payments from escrow;
- failing to apply consumers’ mortgage loan payments in a timely
manner, or at all, resulting in negative credit reporting for consumers,
as well as late fees; - failing to timely issue escrow refunds to consumers; and
- failing to respond to consumer inquiries with accurate information.
LINK: https://www.njoag.gov/ag-platkin-and-the-division-of-consumer-affairs-announce-502000-settlement-with-freedom-mortgage-corp/
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