CFPB sued by mortgage examiner for discrimination, retaliation

A compliance examiner is alleging retaliation and race discrimination behind the scenes at the Consumer Financial Protection Bureau, both before and after the Trump Administration sought to reduce the organization's staff and activities. 

Thaddeaus Sims sued acting CFPB director Mark Paoletta in the Washington D.C. federal court earlier this month, accusing the bureau of assigning higher-responsibility examination work to Black workers without corresponding pay or promotion. The lawsuit is a rare look at purported strife among the professionals regularly performing mortgage lender and servicer exams.

The claims span from summer 2024 through 2025, beginning under former director Rohit Chopra's reign and continuing through the Trump administration's clampdown on the bureau. Sims doesn't name individuals as defendants and only names Paoletta because of his leadership status, but he identifies the managers behind a purported retaliation campaign. 

Will Oliver/Bloomberg

The alleged retaliation came in response to Sims filing an Equal Employment Opportunity complaint in July 2024, after a few management moves. The examiner had tried to get his lawsuit moving forward since last fall, and filed a new federal complaint last week. 

The complaint doesn't specify if Sims still works at the CFPB. Neither an attorney for Sims nor a spokesperson for the Bureau responded to requests for comment Friday. 

Discrimination at the bureau

Sims, a Black compliance examiner who was hired in 2014, performed mortgage, auto-servicing and other supervision work in the Southeast. He says he regularly earned high marks for his work before the bureau subjected him to heightened scrutiny. 

Managers began suggesting deficiencies in Sims' work, and subjected him to increased coaching, he claims. They also assigned him as a "Central Point of Contact" for an unnamed lender, giving him more intensive examination tasks meant for a higher-ranked employee.   

Sims filed his EEO complaint last summer. That prolonged review process resulted in the bureau concluding last September that there was no discrimination.

After he started EEO counseling in summer 2024, the bureau pressed harder on Sims, he claims. The regulator reassigned Sims, a remote worker, to a more complex mortgage origination exam which required extensive travel, while a white colleague was allowed to continue to telework. Sims' managers required him to perform more extensive training, while a different white colleague was not subject to the same requirements to undertake similar work. 

The examiner summarized the pattern of the bureau assigning more work, without a corresponding pay bump or promotion, to colleagues of color. 

"That facially neutral practice disproportionately burdened Black examiners because Black employees were overwhelmingly concentrated in the affected CN-51 cohort," the complaint read. 

More regulator complaints

The bureau has not yet formally responded to the federal complaint. Although the Trump administration has sought to defang the bureau's activities, industry attorneys say the CFPB is still performing exams and weighing lending laws. 

Housing regulators have been hit with a few discrimination lawsuits since the Trump administration came into office, including a challenge by dozens of Fannie Mae workers over a mass firing last spring. The workers say they were unjustly fired over their conduct regarding a company matching donation program.

A federal judge dismissed their complaint against the government-sponsored enterprise and its leadership earlier this year, and those plaintiffs have filed an appeal.