The Consumer Financial Protection Bureau (CFPB) will not enforce a rule that would have required nonbank lenders subject to certain regulatory actions and court orders to register with a CFPB database, the agency announced Friday.

The CFPB stated that in addition to not prioritizing the enforcement or supervision actions of the agency’s registration requirements for small loan providers, it is “further considering issuing a notice of proposed rulemaking to rescind the regulation or narrow its scope.”

Mortgage industry leaders had criticized the policy, arguing that it was redundant and would have been a cost burden for smaller lenders.

In a March 2023 letter to then-CFPB Director Rohit Chopra, the Mortgage Bankers Association (MBA) said the proposal “fails on both accounts” of limiting regulatory burden and considering costs and benefits.

“MBA’s foremost concern with the proposal is that all the information the Bureau seeks is public, and for mortgage companies many of the orders are captured through the Nationwide Multistate Licensing System (NMLS) consumer access,” the letter stated. “By severely downplaying the role of NMLS and similar public registries, the Bureau is significantly overestimating the proposal’s benefits to consumers.”

In the MBA’s daily newsletter released Monday, the association commented on the CFPB’s policy shift, noting that the MBA had “repeatedly voiced its concerns regarding the regulation’s costly and duplicative reporting framework and appreciates the CFPB’s announcement.”

Scott Olson, executive director of the Community Home Lenders of America (CHLA), released a statement Friday expressing the CHLA’s appreciation of the CFPB’s action to “provide regulatory relief for smaller lenders from duplicative registry requirements.”

“CHLA called for such action in our February letter to the CFPB, as part of an agenda of regulatory streamlining so mortgage lenders can concentrate on their main business — originating loans,” Olson stated.