The future of the CFPB under Trump
The agency's operations have been paused, and it will likely be restructured and refocused. Industry experts weigh in on what may — or should — come next.
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The views expressed in this column are solely those of the author.
With a new, anti-regulation administration in Washington, all eyes in the financial and housing sectors are fixed on the Consumer Financial Protection Bureau (CFPB). Established under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, the CFPB was designed to oversee financial institutions, enforce consumer protections, and ensure fairness in lending practices.
However, the agency has often found itself in the crosshairs of partisan debates, and its future now appears uncertain.
The immediate landscape
The Trump administration has consistently criticized the CFPB as overreaching and overly burdensome to businesses, and in the short term, the agency may continue to experience shake-ups at the leadership level. One of the most significant moves has already taken place: President Trump appointed Treasury Secretary Scott Bessent as the acting director of the CFPB following the dismissal of former Director Rohit Chopra.
Bessent, a former hedge fund manager and advocate of the administration's deregulatory stance, is expected to steer the CFPB toward policies aimed at reducing regulatory burdens on financial institutions.
One of Bessent's initial actions as acting director was to order a halt to the CFPB's ongoing activities, effectively pausing the bureau's operations — a move that could prevent the implementation of pending regulations, such as a rule prohibiting data brokers from selling sensitive personal information, including Social Security numbers.
Industry insights
To better understand the current state of the CFPB and the potential impacts of these changes, we spoke with two mortgage professionals who have extensive experience navigating CFPB regulations and the mortgage lending landscape.
Declining ethics: Andy Harris, founder of Vantage Mortgage Brokers and a former executive director at the National Association of Mortgage Brokers, emphasized the historical inconsistencies in CFPB enforcement. "The CFPB has been largely dormant in recent years, but in late 2024, they ramped up enforcement as if they anticipated a regulatory shift," Harris noted.
Without proper enforcement measures in place, deregulation could allow unethical practices to proliferate, Harris suggested. "Violations today are at their highest levels in primary mortgage origination, and the ethics are lower than they were during the subprime lending days before 2008."
Reform, not deregulation: Stephen Moye, a top-producing loan officer with New American Funding, echoed concerns about deregulation but also highlighted areas where reform is necessary. "I don't think regulation itself is bad — if we take the industry seriously, we should support governance," he said.
But he also sees flaws in the current structure, particularly regarding loan officer compensation. "There needs to be more flexibility in how we compensate returning clients. Right now, if a borrower comes back for a refinance, I can't offer them as competitive a rate as an online lender simply because of the rigid comp rules. That's something that needs fixing."
Legislative and judicial challenges
Congressional Republicans have long sought to curtail the CFPB's power, and a new administration aligned with these views could breathe fresh life into legislative efforts. Proposals to restructure the CFPB into a commission-based model, akin to the Securities and Exchange Commission, may resurface. Such a shift would dilute the director's unilateral authority and create a more bipartisan governance structure, though it would likely face fierce opposition from Democrats and consumer advocacy groups.
Several ongoing legal challenges to the agency's authority and funding structure could also gain momentum with the support of a more sympathetic Department of Justice. Critics of the CFPB have long argued that its funding mechanism, which bypasses congressional appropriations by drawing directly from the Federal Reserve, violates the Constitution's separation of powers. A ruling against the CFPB in these cases could have profound implications for its operational capacity.
An uncertain future
Over the next four years, the CFPB's broader mission could shift dramatically from aggressive enforcement actions to a more collaborative approach with industry stakeholders. Under new leadership, the CFPB might emphasize guidance and education over penalties, fostering an environment that critics argue is more business-friendly but that supporters warn could undermine consumer protections.
Key areas of focus for a restructured CFPB could include:
Mortgage and housing policies: Changes to the Home Mortgage Disclosure Act reporting requirements and the QM Rule could significantly impact lenders and borrowers. The administration may argue that easing these regulations will lower costs and expand homeownership, though skeptics contend it could lead to increased risk in the housing market.
Financial technology: As the financial sector continues to innovate, the CFPB could take a more hands-off approach to regulating FinTech companies. A lighter regulatory touch might encourage innovation but could also leave consumers vulnerable to emerging risks.
Data privacy and security: With increasing attention on data privacy, the CFPB may play a reduced role in this area, ceding ground to other regulatory bodies or relying on voluntary compliance from financial institutions.
The CFPB stands at a crossroads under the Trump administration. The appointment of Scott Bessent as acting director marks a decisive shift in the bureau's approach, with immediate regulatory rollbacks and an industry-friendly posture likely to follow.
The agency's longer-term future remains uncertain. Whether the CFPB emerges as a leaner, more business-friendly agency or retains its aggressive consumer protection mandate will depend on the interplay of legislative, judicial, and public forces in the years ahead.
As the story unfolds, one thing is clear: The CFPB's evolution will have far-reaching implications for the financial industry and consumers alike.
The CFPB was contacted for comment but declined to provide a statement.
Coby Hakalir has been a leader in the mortgage industry for almost three decades. He currently leads the mortgage banking and mortgage tech division for T3 Sixty, one of real estate's leading management consultancies, and resides in Northern California. (Note: T3 Sixty founder Stefan Swanepoel also founded Real Estate News.)