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The Consumer Financial Protection Bureau (CFPB) has rescinded a nonbank registry rule finalized in July 2024 under Director Rohit Chopra’s reign at the financial crime enforcement agency.
The Nonbank Registry Rule (NBR Rule) required nonbank financial companies under CFPB supervision, which includes independent mortgage banks (IMBs), to register with the bureau when subject to a court order or other local, state or federal enforcement actions stemming from violations of consumer financial protection laws.
A record of those orders and violations was to be compiled in a public registry.
Banking groups including the Mortgage Bankers Association (MBA), American Bankers Association and Community Home Lenders of America (CHLA) opposed the rule, citing regulatory redundancy and added compliance burdens they said would raise consumer costs.
IMBs already report similar information about court orders and government enforcement actions to the Nationwide Multistate Licensing System and Registry, managed by state banking regulators.
On Wednesday, the CFPB under Acting Director Russell Vought finalized a rule rescinding the regulation — which had been frozen since April due to industry pushback — writing in the Federal Registry that the costs imposed on regulated entities and the CFPB did not support “the speculative and unquantified benefits to consumers.”
Chopra defied industry opposition to pass the rule, believing that separate registration of nonbank misdeeds would enhance public transparency, streamline supervision and counter recidivism, or the prevalence of repeat violations, among nonbank institutions.
“The Bureau agrees with commenters who supported rescission of the NBR Rule because its various features are duplicative, unnecessary, or significantly burdensome,” the CFPB wrote in its final rule posted in the Federal Registry on Wednesday.
The CFPB referenced comments from a “mortgage industry association,” which shared during the initial rulemaking process that “while it agreed that deterring recidivism is an important goal, it was unclear how the NBR Rule serves that goal by simply centralizing information about orders that are already public.”
In a corresponding move Wednesday, Vought withdrew a February 2023 proposed rule that would have created a public registry of supervised nonbanks’ contract terms and conditions “that seek to waive or limit consumer legal protections.”
The rescission of both rules elicited applause from mortgage industry groups that have long contested the rules’ supposed efficacy.
“The Community Home Lenders of America enthusiastically praises the Trump administration for rescinding CFPB registration requirements that drive up mortgage origination costs, while serving no consumer purpose,” said Scott Olson, executive director of the CHLA, in a statement provided to Scotsman Guide.
Bob Broeksmit, president and CEO of the MBA, echoed Olson’s comments.
“We commend the Trump administration for engaging with us on this issue and look forward to continued collaboration on policies that reduce unnecessary regulatory burdens and strengthen accountability while protecting consumers and fostering a more competitive and efficient housing finance system,” Broeksmit said.
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