Freedom Mortgage Fraud Exposed

Freedom Mortgage, one of the largest non-bank mortgage lenders in the US, has been accused of widespread fraud.

The company has been sued by multiple states, including New York and California, for allegedly engaging in deceptive and unfair lending practices.

Freedom Mortgage's business model relies heavily on refinancing existing mortgages, which has led to accusations of targeting vulnerable homeowners.

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Freedom Mortgage has been in the news for all the wrong reasons. A New Jersey Superior Court Judge ruled that the company defrauded a 70-year-old homeowner, Mamie E. Major, by charging her nearly $11,500 in fees for a refinanced loan.

Freedom Mortgage approved the loan to generate fees rather than to benefit the borrower. This is a clear case of predatory lending, where the lender prioritizes profits over the borrower's well-being.

The loan was approved without a new appraisal, and Freedom Mortgage obtained none of Major's tax returns or ordered a credit report. This lack of due diligence led to the borrower defaulting on the loan just six payments in.

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Freedom Mortgage was also found guilty of harassing sales calls, bait-and-switch sales tactics, and failing to fulfill its obligations as a loan servicer. Over 1,400 complaints were filed against the company nationwide.

The company was ordered to forfeit its fees and interest and pay Major over $34,000 in damages. Freedom Mortgage also agreed to a $502,000 settlement for violating consumer protection laws.

The settlement requires Freedom Mortgage to pay $365,200 in civil penalties and reimburse the Division's legal and investigative expenses to the tune of $136,800.

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Freedom Mortgage Corp. agreed to a $502,000 settlement in response to allegations of consumer protection law violations.

The settlement was reached after an extensive investigation into the mortgage provider's operations in New Jersey and beyond.

Freedom Mortgage was accused of harassing sales calls, bait-and-switch sales tactics, and failing to fulfill its obligations as a loan servicer.

Over 1,400 complaints nationwide were filed against the company between January 2015 and June 2022.

The company must pay $365,200 in civil penalties and reimburse the Division's legal and investigative expenses to the tune of $136,800.

An additional $50,000 in civil penalties will be immediately levied if Freedom Mortgage fails to comply with the settlement terms within the next year.

Freedom Mortgage is required to assign an employee as the company's Complaint Coordinator within the next 30 days.

This position will ensure compliance with the Consent Order's terms and all pertinent consumer protection laws and regulations over a period of 18 months.

The Complaint Coordinator will also provide the Division with written quarterly reports summarizing any additional complaints received or resolved by Freedom Mortgage.

Freedom Mortgage was found guilty of several infringements, including unregistered telemarketing, deceptive practices, and failure to timely disburse payments from escrow.

The company's actions constituted breaches of the New Jersey Consumer Fraud Act, the Advertising Regulations, and the Telemarketing Do Not Call Law, among others.

The Division of Consumer Affairs is committed to protecting consumers from manipulative behavior.

The settlement marks a victory for consumer rights and puts a stop to the unlawful and abusive conduct Freedom Mortgage subjected consumers to.

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The CFPB has been taking action against Freedom Mortgage for alleged violations of the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order.

Freedom Mortgage was ordered to pay $3.95 million for submitting incorrect mortgage data in 2020, which included 700,000 closed loans and applications.

The CFPB claims that Freedom Mortgage ignored requirements to submit accurate data that help federal regulators maintain a fair home lending market.

Freedom Mortgage was previously fined $1.75 million for errors in its 2019 data regarding borrower race and ethnicity.

The proposed settlement requires Freedom Mortgage to regularly audit, test, and correct its HMDA data to prevent future violations.

The CFPB also alleged that Freedom Mortgage submitted its 2020 HMDA data to the bureau in early 2021 with "widespread and significant errors."

Freedom Mortgage is a repeat offender, according to CFPB Director Rohit Chopra, who stated that the company has ignored requirements to submit accurate data.

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The case was originally filed in October 2023, and Freedom Mortgage has been involved in several recent cases involving the CFPB, including an alleged kickback scheme in 2023.

Freedom Mortgage was ordered to pay $1.75 million related to the kickback case, while Realty Connect was slapped with a $200,000 penalty.

In addition to the HMDA violations, Freedom Mortgage also faced allegations of consumer protection law violations, including harassing sales calls and bait-and-switch sales tactics.

The company agreed to a $502,000 settlement in response to these allegations, which included paying $365,200 in civil penalties and reimbursing the Division's legal and investigative expenses.

Freedom Mortgage was also required to assign an employee as the company's Complaint Coordinator to ensure compliance with consumer protection laws and regulations.