Key facts
- The CFPB has submitted a request for information (RFI) to the White House Office of Management and Budget (OMB) regarding mortgage regulations.
- The RFI is intended to expand access to mortgages, particularly for community banks and smaller financial institutions.
- Industry experts believe the CFPB's reduced staffing levels will necessitate prioritization of regulatory changes.
- Potential incremental changes include adjustments to loan officer compensation, ability-to-repay, and TRID rules.
- Litigation concerning CFPB layoffs is ongoing and could impact deregulatory efforts.
The Consumer Financial Protection Bureau (CFPB) is initiating steps to modify mortgage regulations, aiming to broaden access to credit, particularly for smaller financial institutions. This effort is being pursued through a request for information (RFI) submitted to the White House Office of Management and Budget (OMB), following executive orders from President Donald Trump. However, the bureau is reportedly operating with reduced staffing, leading industry experts to suggest that the scope of potential changes may be limited to incremental adjustments rather than a comprehensive overhaul.
Experts like Colgate Selden, a founding member of the CFPB, anticipate that near-term changes will focus on less complex areas such as tweaks to the loan officer compensation rule, ability-to-repay (ATR) standards, and the TILA-RESPA Integrated Disclosure (TRID) rule. A full rewrite of TRID is considered unlikely due to the potential costs for industry participants to retool compliance systems. The loan officer compensation rule is seen as gaining traction, with proposals to allow lenders to adjust compensation based on competing loan estimates from other companies, and potential considerations for different compensation structures for state housing finance agency bond loans.
Kris Kully, a partner at Mayer Brown, noted that the RFI process could explore tailoring the ATR rule for small creditors, offering more flexibility for loans held on balance sheets. The bureau may also seek to simplify regulations for refinancing transactions. However, areas like the Home Mortgage Disclosure Act (HMDA) reporting obligations, which have faced litigation in the past due to insufficient data and cost-benefit analysis, could prove more challenging to modify given limited staff capacity. Ongoing litigation related to CFPB layoffs, where a court denied the Department of Justice's request to allow layoffs to proceed while litigation continues, further complicates deregulatory efforts.
Industry sources identify Elie Greenbaum, an adviser to acting CFPB Director Russell Vought, as a key contact for mortgage regulation. Vought currently holds dual roles as OMB director and acting CFPB director. Brian Johnson, who is expected to be confirmed by the Senate, is anticipated to continue Vought's agenda. Experts suggest Johnson's leadership may signal a return to a "rule-of-law operating posture," focusing enforcement on measurable consumer harm rather than technical violations.