CFPB could be reduced to ‘five men and a phone’ 

The future of the Consumer Financial Protection Bureau is still unknown, with conflicting statements suggesting it will either be "streamlined" or "wound down," while the direction and mandate of other housing-related agencies is becoming more clear.

Here's where things stand today.

Inside the plan to phase out the CFPB 

CFPB operations have been on hold since the beginning of the month, but there has been uncertainty as to if or when the agency would be formally phased out. A series of court documents in a lawsuit filed by the National Treasury Employees Union, which represents CFPB employees, have offered some clues about the agency's fate. 

Earlier this week, CFPB acting director Russell Vought and other defendants in the case filed a lengthy response to the Feb. 10 complaint, which alleges that the Trump administration is engaged in an "ongoing effort to dismantle the CFPB."

Vought countered that Trump's nomination of Jonathan McKernan as the agency's new director and his subsequent confirmation hearings this week "are inconsistent with Plaintiffs' view of current events." The Feb. 24 filing also notes that Vought's letter to the Federal Reserve sharing the new leadership's plans to "run a substantially more streamlined and efficient bureau" implies that "there will continue to be a CFPB," the filing states.

But a subsequent filing on Feb. 27, which includes testimony from CFPB employees, appears to validate concerns that the agency will be gutted.

One unnamed staffer referred to the recent actions as an attempt to ensure the agency does "not exist" by reducing the CFPB to a team of just "five men and a phone," while another described meetings in which Adam Martinez — the CFPB's chief operating officer — outlined plans to "wind down" the CFPB and "carry out the closure of the agency."

That staffer went on to testify that employees were to be eliminated in three phases, starting with probationary employees, followed by the shuttering of entire divisions and then the firing of "most of its remaining staff" within 90 days, CNBC reported. Meanwhile, some recent terminations at the agency have been reversed, according to Bloomberg Law.

If the CFPB does remain afloat, NAR said it supports McKernan's confirmation as director. In a letter submitted to ranking members of the Senate Banking Committee last week, NAR President Kevin Sears described McKernan as "uniquely suited" for the position with a "wealth of financial services policy experience."

Multiple CFPB claims dropped

While the agency remains in limbo, several legal actions have been suspended. The CFPB dropped five major cases this week, according to NPR, including a suit filed last month against Capitol One claiming that the bank had cheated customers out of more than $2 billion in interest.

The agency also discontinued actions against Rocket Homes and the Jason Mitchell Group over alleged RESPA violations as well as cases filed against two other lenders and the Pennsylvania Higher Education Assistance Agency. 

Proposed HUD rule scrapped

Also this week, the Trump administration revoked a rule proposed by HUD in 2023, Politico reported. 

The Affirmatively Furthering Fair Housing rule aimed to reduce housing discrimination by requiring local governments to report on (and address) housing-related segregation patterns or risk losing federal funds. The rule had faced controversy even under the previous administration, which never finalized it, but it now appears to be off the table for good.

In a statement released on Feb. 26, HUD Secretary Scott Turner said revoking the rule would put decision-making power back in the hands of cities and states: "Local and state governments understand the needs of their communities much better than bureaucrats in Washington D.C. Terminating this rule restores trust in local communities and property owners, while protecting America's suburbs and neighborhood integrity." 

FHFA nominee says any efforts to privatize Freddie and Fannie 'must be carefully planned'

In addition to McKernan, Bill Pulte, Trump's nominee to direct the Federal Housing Finance Agency, faced questions during confirmation hearings this week. Pulte — the grandson of PulteGroup founder William Pulte and CEO of a private equity company — is also a prominent "Twitter philanthropist" who built a large following on X (formerly Twitter). He is believed to have deleted tens of thousands of posts before his Feb. 27 hearing. 

During the hearing, Pulte responded to speculation that the Trump administration will privatize Freddie Mac and Fannie Mae, explaining that "any exit from conservatorship" of those government-sponsored enterprises "must be carefully planned to ensure the safety and soundness of the housing market without upward pressure on mortgage rates."