CFPB rescinds nonbank registry rule

"The main criticism from mortgage trade groups centered on what they characterized as the rule's redundancy. Independent mortgage banks (IMBs) already report similar information through the Nationwide Multistate Licensing System and Registry (NMLS). After pushback, the CFPB froze the rule in April. The CFPB also decided to withdraw a 2023 rule that would have required the registry of supervised nonbanks that use form contracts to impose terms and conditions that waive or limit consumer legal protections."

"In his justification for the rescissions published in the Federal Register, CFPB acting director Russell Vought raised concerns about the costs the rules impose on regulated entities and the expenses CFPB would incur for maintaining the registries. He also mentioned speculative and unquantified benefits to consumers and said the tools were not necessarily effective to monitor and reduce potential risks."

CFPB froze a proposed registry rule in April and decided to withdraw a 2023 registry rule for supervised nonbanks using form contracts. Mortgage trade groups criticized the registry proposals as redundant because independent mortgage banks already report similar information through the Nationwide Multistate Licensing System and Registry (NMLS). Acting director Russell Vought justified the rescissions by citing costs imposed on regulated entities, CFPB expenses for maintaining registries, speculative and unquantified consumer benefits, and doubtful effectiveness at reducing risks. Trade groups including the Community Home Lenders of America and the Mortgage Bankers Association praised the decisions as reducing compliance burdens and preserving focus on delivering affordable mortgage credit.

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