(Reuters) - Bank of America has agreed to pay a $12 million fine to settle charges brought by the U.S. Consumer Financial Protection Bureau (CFPB) for routinely submitting inaccurate information about mortgage applicants to the federal government. The second-largest U.S. bank allegedly violated the Home Mortgage Disclosure Act, a law designed to prevent discriminatory lending practices, by failing to accurately report demographic data.

According to the CFPB, over 400 loan officers at Bank of America failed to ask mortgage applicants required questions about their race, ethnicity, and sex. Furthermore, these loan officers then falsely reported that the applicants had chosen not to respond to these inquiries. The inaccurate reporting of demographic data by the bank led to a violation of the 1975 law, which is intended to help regulators assess whether lenders are meeting their communities' housing needs.

The civil fine, covering the alleged conduct between 2016 and 2021, was accepted by Bank of America without admitting or denying any wrongdoing. In response to the settlement, CFPB Director Rohit Chopra stated that additional measures would be taken to ensure that the bank ceases its violation of the law, although he did not provide further details.

Bank of America defended its actions, stating that it properly collected demographic data more than 99% of the time. The bank also emphasized that it had notified the government after receiving a complaint in 2020 and has since improved training to ensure that employees ask mortgage applicants for the required data.

Bank of America's consumer lending business, as reported in its latest quarterly report, originated $15.5 billion of first mortgages between January and September. This figure represents a 61% decrease compared to the previous year. The decline in originations can be attributed to lower interest rates in the previous year.

The settlement reached by Bank of America serves as a reminder of the importance of accurate reporting of demographic data in the mortgage industry. The CFPB's enforcement action emphasizes the significance of complying with the Home Mortgage Disclosure Act to prevent discriminatory lending practices and enable regulators to assess lenders' community engagement.