Nonbank mortgage lenders sent a deregulation wish list this week to the Trump administration, asking that the Consumer Financial Protection Bureau (CFPB) scale back drastically its oversight of them.
The Community Home Lenders of America (CHLA) wants the bureau to exempt smaller nonbank mortgage lenders from exams that determine whether a lender is complying with federal consumer protection laws.
CHLA further asked that exams of large nonbank lenders be restricted only to cases where there is a gap in review by state regulators or in cases where the state agency requests an examination.
This would address a longstanding frustration among nonbank mortgage lenders, also known as independent mortgage bankers (IMBs), that bank lenders aren’t held to the same standard that independent bankers must meet.
“While 97% of banks (those under $10 billion in assets) are exempt from CFPB supervision, every IMB – no matter how small or how few loans it originates – is redundantly subject to exams and enforcement actions by the CFPB with respect to all federal consumer protection laws,” the letter said.
Further, CFPB “should end regulation by enforcement,” a practice that it called “disproportionately harms smaller IMBs and their borrowers.”
“Moreover, CFPB fines and orders should be based on the severity of the violation and should be clearly defined and be of finite term,” the letter said.
The letter also asks for flexibility in the loan officer compensation rules, which prohibit loan officers from receiving compensation based on the terms or conditions of a loan, including the interest rate. That will help consumers by increasing competition and removing impediments to state Housing Finance Agency loans and IMB brokered loans.
Lastly, CFPB should “immediately suspend court order registry requirements for IMBs and withdraw its proposed form contracts rule,” the association stated, calling these requirements redundant and unnecessary.
The letter, sent to then Acting Director Russell Vought on Wednesday, was entitled, “Streamlining Mortgage Regulations and Supervision,” and referenced President Donald Trump’s Jan. 31 deregulation order.
Vought, an architect of Project 2025 that called for the dismantling of the bureau, has since been replaced as acting director by Jonathan McKernan, a former board member of the Federal Deposit Insurance Corporation. McKernan is expected to become the full-time director.
