If you read the headlines, it seems the Consumer Financial Protection Bureau, aka CFPB, is either dead or on death’s doorstep. Enforcement and supervision have effectively ceased, and despite a recently published aggressive regulatory agenda, its capacity to accomplish this agenda is questionable.
Leadership has attempted to execute multiple sets of mass layoffs amounting to 90% of staff, which remain tied up in litigation by the employees’ union. Bureau staff cannot attend conferences or interact in meaningful ways with stakeholders.
The mortgage industry has had many complaints about CFPB overreach over the years. With a neutered CFPB, did their wishes finally come true?
Unfortunately, most regulated entities don’t find this brave new world easier to navigate. The rules under CFPB jurisdiction — 18 separate statutes — remain on the books. Many of them can be enforced by state and federal regulators like the Federal Trade Commission (FTC), as well as private litigants. TILA and RESPA (Truth in Lending Act and Real Estate Settlement Procedures Act), for example, have a “private right of action” built in.
Some of these rules need updating, which can’t happen without the CFPB actively writing rules and soliciting feedback. Amid a perceived pullback in federal oversight, state legislatures are busy proposing new state laws. State regulators and attorneys general are bringing cases to fill the void, often creating conflicting rules and expectations that national mortgage companies must reconcile.
From one often overly aggressive cop in the CFPB, the industry now operates in a “wild west” of regulation where compliance risk may be more unpredictable. Regulatory risk might even come from the future since most rules have a “look-back” period by which a reactivated CFPB could review today’s transactions and cite regulated entities.
A brief CFPB history
The bureau was formed in 2011 as a response to the 2008 financial crisis. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the bureau by statute, sought to address fragmentation and gaps in existing regulatory frameworks. Dodd-Frank centers on mortgage reforms but includes a range of consumer financial products.
Before Dodd-Frank, consumer laws were enforced by states and the FTC, as well as prudential regulators like Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. Supervision, enforcement and rulemaking authorities for the 18 consumer protection statutes were dispersed among different federal agencies with competing mandates and agendas, leading to inconsistent approaches. The CFPB was given regulatory authority for a range of consumer protection statutes and empowered to supervise not just banks but also nonbanks, which now play a dominant role in mortgage lending.
Under Director Richard Cordray, the early bureau (CFPB 1.0) experienced successes and failures. Large entities benefited from a more consistent supervisory framework across different types of companies that required entities to have robust compliance management systems.
CFPB 1.0 wrote several landmark rules, including TRID (TILA-RESPA Integrated Disclosures), the Ability to Repay (ATR) rule and the servicing rule. These rules have endured through regulatory booms and busts, bolstering protections for mortgage borrowers.
The CFPB developed a tendency to overreach, particularly with enforcement, leading the Mortgage Bankers Association and others to accuse the CFPB of “regulation by enforcement.” The $74 million PHH Corp. settlement in 2017, through which the bureau expanded its interpretation of RESPA, provides one example.
The overreach bore a significant unintended consequence: The CFPB got handed an opinion by the D.C. Circuit Court that touched on constitutional issues, foreshadowing a 2020 Supreme Court opinion in Seila Law v. CFPB that changed the CFPB’s structure to have its director serve at the will of the president.
After Cordray came the Kathy Kraninger era (CFPB 2.0). As director, Kraninger focused on supervision and consumer education, adopting a consensus approach to regulation. She encouraged supervised entities to disclose self-identified errors, rewarding those with good compliance management systems.
The bureau confronted the COVID-19 pandemic during Kraninger’s tenure, becoming a hub for federal resources among borrowers impacted by COVID and softening servicing rules to streamline mortgage resolutions. As the “qualified mortgage (QM) patch” was expiring, threatening market disruptions, she developed a price-based approach to QM criteria, building flexibility into QM underwriting. The revised rule was broadly supported by industry and consumer advocates.
Finally, CFPB 3.0 — the Rohit Chopra era — arrived. Director Chopra pursued aggressive enforcement in lieu of policy consensus and consumer education. He published blogs and advisory opinions to push supervised entities where he thought compliance should go, often beyond what the rules textually required.
The same transpired for enforcement cases, when he would cite institutions that followed the rules but outcomes fell short of his preferences. He filed enforcement cases that went beyond what the rules said. Almost all the cases active as of the change in presidential administration in 2025 (at least 22) have subsequently been withdrawn by White House Office of Management and Budget Director Russell Vought, who was named acting director of the CFPB in February 2025 One example is Vanderbilt Mortgage & Finance, a manufactured lender that focused on low- to moderate- income consumers, which was sued in Chopra’s waning days for allegedly not following ATR rules. In fact, the company did more than was required by the rule, including adding a residual income test.
Chopra made combating “junk fees” a key part of his efforts, without a clear definition of junk fees or clear authority to issue rules and guidance prohibiting them. He did not conduct much rulemaking in the mortgage space, but his proposed rules on servicing — initially desired by the industry and designed to update outdated regulations on loss mitigation — included a bevy of additional language access requirements widely panned by the industry. To date, the servicing rules still have not been updated.
Creating a sustainable bureau
So, how do we dismount this episodic merry-go-round of dramatic policy priority shifts? How do we nurture consistency and sustainability at the bureau to serve and protect consumers while fairly and transparently refereeing regulated entities?
The bureau has always had one consistent flaw: it has been governed by a single director who has very few checks on their authority. While some directors used that authority modestly, others pushed it to its limits. Regulated entities weren’t sure what was allowed. The Seila Law case, which ended restrictions on the president’s removal authority, made the position even more subject to political whims.
Suggestions to create a commission mirroring the FTC or National Credit Union Administration have fallen into disfavor, as those commissions did not establish the check they were designed to provide. Also, signs have emerged that the Supreme Court may overturn case precedent protecting members of commissions and boards from political pressures.
Mechanisms are needed to provide real-time feedback, and perhaps a check, on public actions of the bureau such as enforcement cases and proposed rules. For many organizations that feedback loop is provided by a board of directors. The CFPB is required by statute to have an advisory board. With a rotating membership of both consumer advocates and representatives of regulated entities, the board is mostly ceremonial, but it could be given the power to review and reject public actions, providing additional perspective on potential actions. Yes, it could slow down the bureau; but it could also make the actions it takes more durable and effective.
The most lasting actions of the CFPB — TRID, the Ability to Repay rule and the updating of Home Mortgage Disclosure Act — occurred with direct feedback from industry and consumer advocates. The rules reflected compromise. Neither party got everything they wanted. As a result, though these rules have been tweaked, they remain in force. An empowered advisory board could provide the feedback a CFPB 4.0 needs to protect against future overreach and become an accepted part of the regulatory landscape.
