CFPB, facing staffing constraints, moves to expand mortgage credit box

The Consumer Financial Protection Bureau (CFPB), amid months of uncertainty under the Trump administration, is moving to pursue changes to mortgage regulations, most recently by advancing a request for information (RFI) intended to expand access to mortgages.

The RFI was sent to the White House Office of Management and Budget (OMB) on June 22 and follows President Donald Trump’s March 13 executive orders aimed at opening the credit box — particularly for community banks with less than $30 billion in assets and smaller banks with less than $100 billion)

But with the CFPB operating with reduced staffing, mortgage industry experts said the bureau will need to prioritize.

“They would like to do a bigger rewrite of several things, but I don’t know that ultimately they’ll have time — or the capacity,” attorney Colgate Selden, a founding member of the CFPB and a shareholder at Baker Donelson, said in an interview with HousingWire.

Selden said the most realistic near-term changes are incremental — including tweaks to the loan officer compensation (LO Comp) rule adjustments to ability-to-repay (ATR) and timing changes to TRID (the TILA-RESPA Integrated Disclosure rule). These updates would not require major technology overhauls.

A full TRID rewrite is unlikely in the near term, Selden said, because industry participants would likely push back given the cost of retooling compliance systems at a time of low volumes and tight margins.

The LO Comp rule is gaining traction, he added. Some sources see the topic not moving forward, but the Mortgage Bankers Association (MBA) has pushed for allowing lenders to reduce LO compensation when borrowers present competing loan estimates from unaffiliated companies. Selden said the bureau could consider allowing different compensation structures for state housing finance agency bond loans — an industry request that has circulated for years.

The CFPB did not immediately reply to HousingWire’s request for comments.

What’s harder to lift?

Kris Kully, a partner in Mayer Brown’s consumer financial services group, said the CFPB may use the RFI process to explore how the ATR rule could be tailored to small creditors such as community banks. This would potentially offer more flexibility when loans are held on balance sheets.

“They’ll also likely to address ways that they can open up the regulation to easier refinancing transactions,” Kully said. “Some refis, just by definition, put the borrower in a better position, but it’s pretty narrow in the regulation. So I would be very surprised if they don’t ask for information about how they can broaden that concept, making it easier for borrowers who want to refi.”

Kully said that with a smaller workforce, the bureau appears to be prioritizing items it can do “quickly and efficiently,” though some areas will be more difficult than others.

One example is the Home Mortgage Disclosure Act (HMDA). Trump’s executive order references easing HMDA reporting obligations, but prior attempts to scale back data collection drew litigation. which argued that the CFPB did not adequately support the changes with data gathering and cost-benefit analysis. With limited staff, building that record could be a heavier lift.

Industry experts also said ongoing litigation tied to CFPB layoffs could complicate deregulatory efforts.

In the latest development, the U.S. Court of Appeals for the District of Columbia Circuit denied a request by the Department of Justice (DOJ) to allow layoffs at the bureau to proceed while litigation continues. Instead, the court sent the case back to District Court Judge Amy Berman Jackson to determine whether a preliminary injunction issued last year should be modified in light of the CFPB’s revised reduction-in-force plan and other developments.

Leadership and direction

Industry sources view Elie Greenbaum, an adviser to CFPB acting director Russell Vought, as a key point of contact on mortgage regulation. Greenbaum previously held senior roles on congressional committees and served at the Department of Housing and Urban Development (HUD), where he advised the secretary. At housing events, attendees said he has signaled openness to industry input.

Vought currently serves as both OMB director and acting CFPB director, meaning the RFI effectively goes from Vought to Vought.

Meanwhile, Brian Johnson — who is expected to be confirmed by the Senate before Vought’s term ends in August — is expected to pursue Vought’s agenda across regulation, supervision and enforcement, experts said. Johnson previously served as deputy director of the CFPB during Trump’s first term.

“The CFPB is concentrating on supervision activities that are more in the realm of corrective action and less in the realm of significant civil money penalties,” Kully said.

Selden said Johnson would represent a “return to a rule-of-law operating posture,” similar to the Mick Mulvaney and Kathy Kraninger eras, with enforcement focused on measurable consumer harm rather than technical or theoretical violations.

“There are people who wanted to shut the CFPB down,” Selden said. “But sometimes there’s a way of negotiating around Washington — there were also voices in the administration talking about having the right people at the agencies.”