CFPB prioritizes Reg X, GSE streamline refis as LO Comp hopes fade

The Consumer Financial Protection Bureau (CFPB) could finalize changes to its Regulation X servicing rules while creating a regulatory pathway for streamlined refinances through the government-sponsored enterprises (GSEs) by the end of this year, mortgage industry sources told HousingWire.

Meanwhile, prospects for changes to the loan originator compensation rule (LO Comp Rule) — particularly revisions that would allow compensation to vary based on loan terms, a restriction established under the Dodd-Frank Act — appear to be fading despite sustained lobbying from industry trade groups.

One source said the CFPB does not believe changes to the LO Comp rule would have a “meaningful” impact and that the agency “doesn’t have the bandwidth” to pursue the issue. By contrast, the CFPB sees “far more interest” in creating a streamlined refinance framework for Fannie Mae and Freddie Mac due to its broader economic implications.

The Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) already offer streamlined refinance programs that allow loans backed by the agencies to bypass full reunderwriting requirements. The GSEs currently lack a comparable permanent option. Such a program would likely exempt certain rate-and-term refis from the ability-to-repay rule.

The CFPB did not immediately respond to HousingWire’s request for comment.

A potential rollback of the LO Comp rule, along with revisions to servicing requirements under the Real Estate Settlement Procedures Act (RESPA) and Regulation X, appeared on a list of rules under review submitted to the Office of Management and Budget (OMB) in June 2025.

President Donald Trump also issued two executive orders in March that aim to expand U.S. housing supply and increase consumer access to mortgage credit, touching on a broad range of housing finance issues.

LO Comp rule details

The Mortgage Bankers Association (MBA) has been one of the industry’s most vocal advocates for revising the LO Comp rule. In a letter sent earlier this month to CFPB acting director Russell Vought, the MBA said it had prioritized three issues tied to Trump’s broader executive order agenda.

Among the group’s proposals were to allow loan originators to reduce their compensation to compete more effectively and better align compensation structures with different loan products, particularly housing finance agency (HFA) bond loans. The MBA also called for reforms to TRID tolerances, cure provisions and timing requirements, as well as updates to Home Mortgage Disclosure Act (HMDA) reporting thresholds under Regulation C.

“Clearly, there are plenty of good ways to roll back red tape and make mortgages more affordable while still protecting borrowers,” MBA president and CEO Bob Broeksmit said this week during the group’s Secondary and Capital Markets Conference in New York.

“The White House has said that it wants to help community banks and smaller institutions. But they aren’t the only lenders who need relief from red tape. So do credit unions, IMBs, large banks and many others.”

Market participants, however, remain divided on the issue.

“MLOs, in their zeal for a deal, do need to be restrained somewhat so that we have a level playing field and they don’t do naughty things like they once did,” Jay Plum, executive vice president at Fifth Third Bank, said during the same conference.

Still, Plum acknowledged that aspects of the rule may warrant reconsideration.

“All that said, it is very difficult to have a consistent pay plan across all sizes of loans when you’re trying to accommodate affordable housing loans in low- to moderate-income census tracts,” he said. “Those in particular need some consideration, and that part of the policy, which was created like spraying peanut butter, does need to be adjusted.”