Mortgage groups praise rollbacks of CFPB nonbank rules

Mortgage industry trade groups quickly expressed support for the Trump administration's elimination of two nonbank registry rules, including a reporting requirement that first went into effect last year.

Leaders welcomed the decision, citing the additional headaches it presented to mortgage lenders with little to no benefit in return. 

"Rescinding these two requirements just makes sense," wrote Scott Olson, executive director of the Community Home Lenders of America, in a press statement.

A rule that mandated nonbanks to register and report violations of local and state court orders to the Consumer Financial Protection Bureau, was first enacted by former CFPB leadership serving under President Biden but proved particularly vexing for mortgage businesses. 

While large tech firms were the primary target of the requirement, the regulation also added unneeded work for independent mortgage banks, officials said in pointing out that the information already appeared in the Nationwide Multistate Licensing System.

A second proposed Biden-era rule that would have required nonbanks to disclose information about consumer contracts, including certain terms and conditions, for future publication was also canceled.  

Mortgage leaders respond

"As CHLA has pointed out in detailed comment letters, the offender registry requirement is redundant with NMLS requirements, and the form contracts registration requirement asks IMBs to disclose waivers of consumer rights that IMBs are not legally allowed to waive in the first place," Olson said.

Similarly, Mortgage Bankers Association President and CEO Bob Broeksmit echoed Olson's comments, noting it was "pleased that the CFPB was receptive to persistent feedback from our members that this registry would have created compliance burdens without improving consumer protection or market transparency." 

Regarding the proposed consumer-contract rule, Broeksmit said that registry would have provided "little public benefit." 

The CFPB under the second Trump administration has been characterized by its deregulatory stance, marked by the removal and rollbacks of mandates introduced under President Biden. The bureau also moved to reverse previous penalties imposed on parties that had willingly signed on to them. 

Earlier this year, Trump-appointed acting CFPB Director Russ Vought said the bureau would not enforce the violation-reporting requirement before he moved to eliminate it altogether. 

In May, the CFPB proposed its rescission of the rule, opening up the proposal for public comment as required by federal law. The bureau's official announcement of its termination came upon the close of the comment period and took effect upon publication in the Federal Register this week.