Dear Messrs. McKernan, Vought, Calabria, Musk, et. al.,
I am the author of a cynical, snarky and heavily footnoted free mortgage industry legal blog[1]entitled Levy’s Mortgage Musings that has a growing base of nearly 2,500 mortgage lending industry subscribers.[2] As a limited government zealot closely observing the mortgage industry regulatory environment, the majority of my posts chronicle in detail my criticism of the CFPB. While I have occasionally complimented the agency for its efforts, the initial optimism I had for former Director Chopra’s market-oriented consumerism was dashed well before he isssued the barrage of rushed regulatory action as he went out the door. To be clear, I am not a trade association, but I might “play one” on my blog.[3]That said, I write with the objective that reading my work will be amusing and that, hopefully, the reader can also learn something.
Accordingly, I have been keenly observing the actions of DOGE and the new Trump administration in 2025 with respect to the CFPB and would like to take the new administration’s effort to overhaul the federal agency bureaucracy as an opportunity to offer my (sort of) humble, yet ever-irreverent, thoughts about the CFPB and regulation of mortgage lending generally.
Blog Post and Open Letter
This open letter will also serve as my 90th blog post since starting my Musings over 5 years ago. During that time, my readers have frequently heard me criticize the CFPB over things like; politically motivated[4] and often poorly supported rulemaking[5] or interpretations[6]; regulatory hubris and overreach[7]; and enforcement bullying.[8]I also have offered CFPB many concrete and practical suggestions for regulatory improvement to eliminate outdated and anticompetitive regulations and focus its efforts on the majority of consumers to lower costs for the whole market.
So, respectfully, I hope you will please consider these completely unsolicited suggestions for reforming the CFPB’s regulation of the mortgage industry and the related laws it has been charged with enforcing.[9] I will try to summarize my thinking, but more detailed information (and humor) can be found in the many links to past posts and the footnotes I provide.
Durable cultural reboot needed
While, personally, I would have been deterred from executing changes in the manner in which the current administration is achieving bureaucratic reform[10], there is no question that, at its core, the CFPB needed a reboot of its culture. Congress gave the agency a consumer protection mandate, but since implementing the original Dodd-Frank Act laws, the agency has hired many consumer advocates more focused on poverty and social justice issues than efficient and transparent markets, consumer confidence, and facilitating innovation to lower the cost of homeownership and financing for all creditworthy Americans. CFPB under Director Kraninger was significantly better, but it is clear that institutionally, she was unable to reform the culture. CFPB’s consumer protection mission needs to be restored with a new culture and leadership emphasizing the interest of all consumers. While I might question the process by which that is occurring, I appreciate the cultural reform objectives of the new administration in that regard.
While I believe most folks with DEI and social justice missions have their hearts in the right place, they typically fail to recognize how subjective the concept of justice is.[11]Under the Constitution we have reserved determinations of justice to the Article III judicial court system. CFPB had no right to establish itself as an arbiter of justice or to reinterpret laws and regulations to pursue its own policy objectives. Yet, most recently, CFPB seemed unapologetically proud of this politically charged approach to its mission, failing to recognize the hubris that embodied. The CFPB should serve all consumers, not just the most vulnerable, and poverty reduction is not part of the CFPB’s Congressional mandate.
Regulatory malpractice?
Meanwhile, despite defenders claiming CFPB was needed as a nimble agency able to act quickly to address changing market conditions, macroeconomic events, technology, and delivery methods in the digital age,[12]that is not at all what the CFPB demonstrated in its 13 years of existence. For example, in prepared remarks at a housing conference last year former Director Chopra justified the CFPB’s restrictive views on the use of AI in mortgage lending by saying, “…, if executed poorly, new mortgage technology could exacerbate disparities or make people worse off. We are on the lookout for how new mortgage tech can contribute to discrimination, collusion, or other illegal activity.” Chopra acknowledged that technology could lower costs, but he elevated concerns over possible disparities[13]as the greater consumer harm to justify inhibiting and/or punishing innovation.[14]
CFPB couldn’t even make an easy layup. When suddenly faced with a new Juneteeth Federal holiday in 2021, CFPB couldn't even offer guidance on how to properly calculate "business days" under the TRID regulation. Almost comically,[15]despite pleas from trade associations and others to help ensure good consumer outcomes by not delaying closings in the name of prescriptive compliance, CFPB couldn’t muster its vast power to offer any guidance whatsoever about its own regulation. Crickets. The industry and consumers muddled through anyway.
New goals needed
In reforming a Congressionally mandated agency such as CFPB, however, it will be critical to articulate new goals and mission statements. Merely recognizing that the political agenda and culture of the “Warrenista” crowd was overly focused on DEI and social justice goals to the detriment of broader consumer interests is insufficient to enable the agency to function going forward. That is, having no goals[16]for the agency is as dangerous as allowing social justice and DEI to control the agenda because it offers no grounding for the power that it wields.
To support a broad, long-term effort to durably reduce CFPB overreach and unnecessary regulations, my partial wish list for mortgage lending reforms is provided below. Some of these suggestions will require Congressional action or further study, but others can be accomplished by the CFPB alone. I start, however, with the babies that should not be thrown out with the bathwater:
1. Keep QM/ATR and TRID.
a. QM/ATR. It is critical to remember that both consumer and secondary market confidence in the US housing market is essential to the economy. The lesson of the Great Recession meltdown was that the mortgage market needs some guardrails to prevent too many people and lenders from making bad choices. The Qualified Mortgage/Ability to Repay Rule under TILA ensures that mortgage lenders will do the right thing by borrowers and not put them into a loan they cannot afford. That helps stabilize housing values for all homeowners, many of whom rely on home equity as a key source of wealth creation. QM has enabled the secondary market to continue to provide a liquid market for home mortgage loans through its safe harbor approach.
b. TRID. Similarly, the complicated cost structure of mortgage loans, and home purchase transactions generally, screams for a standardized consumer cost summary to ensure consumer confidence the deal is as promised and fully disclosed. The TRID disclosure regime isn’t perfect, but it gets the job done. The fact that there has been virtually no litigation or enforcement action(s) over TRID violations (or ATR either) is a testament to the durability of those regulations and the market’s adoption of compliant processes to accommodate them.
2. Regulatory humility. With last year’s Supreme Court rulings about administrative law, CFPB should expressly acknowledge that its interpretations are subject to judicial oversight and defer to express interpretations by the judicial branch. Of course, the CFPB can appeal decisions too. CFPB might have expertise in how best to achieve consumer protection objectives, but that expertise does not extend to interpreting consumer protection statutes (or even their own regulations in hindsight). Article III of the Constitution reserves interpretation of law to the judiciary. This is particularly important in connection with RESPA and the PHH case I note in item 4 b. below.
3. Fair Lending/HMDA. Intentional discrimination is bad and illegal, but when one combines the President’s Executive Order on DEI with the recent SCOTUS Harvard Admissions case, I am unable to see how disparate impact can or will be used as evidence of illegal discrimination by federal enforcement officials in the Trump administration.[17] So, will CFPB continue to require mortgage lenders to measure and submit their racial lending data at all? Eliminating HMDA would require changes to laws, but perhaps the time has come for that to be considered. The fair lending laws as they have been enforced over the past 30 years, however, scream for durable clarity.[18]Mortgage lenders should be able to make non-discriminatory business decisions today about how best to serve consumers in the marketplace without worry that the failure to serve all communities will be viewed as discriminatory in hindsight by another administration with different politics and evidentiary standards for identifying illegal discrimination.
4. RESPA’s anti-kickback provisions. RESPA really is in the nature of a UDAAP type law designed to prevent conflicts of interest from corrupting the advice provided by people trusted to help homeowners buy and finance their homes. I have many thoughts about RESPA that I have shared in my blog and in public and private presentations over the years, but the bottom line is that, at a minimum, comprehensive reform is needed to bring that 1970’s era law into the internet age. Support for a full repeal is worth considering, but there is no question that kickbacks can erode trust among consumers who rely on housing professionals licensed by the states to guide them through the process. But do all referral fees increase costs or erode trust? While identification of consumer harm and/or benefit from referral fees may be challenging, certain things, however, seem obvious to address regarding RESPA and within the existing CFPB’s power.
a. Cease enforcement-based RESPA interpretation/Study the effects of referral fees. Weaponizing RESPA for the kinds of consent order “guidance” of the Cordray and Chopra eras (and a last minute bullying enforcement action by Chopra) reflected a lack of real consideration of consumer harm or whether referral fees were even bad. That would have required the hard work of empirically studying changes in the way that consumers shop for settlement services and related information in the internet age and how technology and homeownership purchasing and financing patterns may change further in the future. Moreover, CFPB’s incorrect interpretations and extrapolated RESPA "guidance" was picked up and amplified further by other regulators in ways that defy logic and common sense, such as considering social media “likes” as things of value or requiring open house flyer costs to be proportionally allocated to the fraction of a penny.
b. Reinforce the use of RESPA FAQs. I didn’t think the RESPA FAQs were needed at the time, because I thought the RESPA interpretation authored by now SCOTUS Justice Kavanaugh in the DC Circuit’s PHH Case was clear. Yet, the 2020 FAQs issued towards the end of the Kraninger era were a solid summary of RESPA's application to many common issues (despite leaving themselves some wiggle room for enforcement purposes) even if the PHH case was not expressly mentioned. Unfortunately, the 2023 Advisory Opinion on neutrality for digital shopping sites, however, simply got it wrong (again) because it failed to interpret RESPA consistent with the PHH case (or even to contend with that decision). That AO should be revoked and the FAQs elevated as CFPB's "guidance" to the industry and other regulators.
c. Make Mortgage Brokering Legal Again. Suffice it to say that mortgage brokering should be legal as long as the lender and broker are both licensed (or exempt). RESPA’s antikickback provisions, however, make the legality of that relationship unclear. CFPB hasn’t done anything to clarify that issue. Instead, CFPB has relied on old HUD policy statements from 1999 and 2000 that fail to capture the nature of the business in 2025 or, perhaps more importantly, the lack of Chevron deference for those old HUD interpretations. As I said in just the second edition of my Musings, this is easily solved within the CFPB’s existing authority by issuing an express exemption for lender-to-lender referrals under Section 8 (c).
5. Repeal the Loan Originator Compensation Rule. This one should be a layup for any deregulatory hawk. Please work with Congress to fully revoke this ill-advised seemingly Marxist inspired, anticompetitive pricing rule that prevents mortgage originators from discounting at the point of sale. Mere interpretative statements offerring flexibility will be insufficient especially because they will be provided no deference by courts, and the rule is enforceable with private rights of action (including class actions).
6. Focus on real consumer harm in enforcement actions. This is the exact kind of work CFPB was set up to do. The goal should not be to find ways to extend existing laws to make things illegal that don’t harm consumers. Enforcement should simply find and prosecute illegal activities that harm consumers.
There is more on my list (e.g., UDAAP, registries, servicing), but again, I don't want reading this to become a chore. I appreciate the opportunity to share some of my thoughts about the CFPB and the mortgage lending industry with the new CFPB leadership and hope this “message in a bottle” approach finds the right audience. I always welcome further dialogue with anyone interested in serious discussion of these issues.
Very truly yours,
Brian Levy, Author of Levy's Mortgage Musings
[1] I also have over 30 years’ experience as in-house and outside counsel to dozens of banks, mortgage lending businesses, and related vendors.
[2]All of my subscribers have signed themselves up. I haven’t used any mailing lists to obtain subscribers nor do I sell my list.
[3] My views are my own and I am not representing any particular client or speaking on behalf of any trade association or even my subscribers in this post/letter. My law firm cringes a bit when I write these posts.
[4] I still find it amusing that Elizabeth Warren promised the CFPB would be “data driven,” but that was removed from its mission statement at some point and memory-holed that idea.
[5]That particular Musing about CFPB’s 2021 proposed Reg X COVID-19 Servicing amendments was submitted as a comment letter, but CFPB chose not to comment on it in its Final Rule, proving my statement therein that such letters can be a fruitless exercise. Perhaps this message in a bottle letter is similarly doomed.
[6]This one was well supported, but the conclusion was just wrong and impractical.
[7]There really are too many instances of this to list.
[8]See also, https://mortgagemusings.com/f/ed28-billions-fair-fights-the-cfpband Marx Sterbcow’s The CFPB’s rogue war: One agent's battle against the bureaucracy.
[9]And interpreting in some instances, but agency interpretation may be overreach in itself now.
[10] It is unclear to me if real cultural change could be achieved in a way that didn’t result in the draconian kinds of human impact on the CFPB’s staff. Social media is replete today with former CFPB staffers now saying that they were never really on-board with the CFPB’s overemphasis on social justice policymaking goals and bullying tactics used by CFPB’s enforcers.
[11] To highlight how distorted and subjective using DEI as a goal can be, remember, this is the agency that paid $6 million to settle discrimination claims by its own employees and then had the bright idea to survey its employees to disclose their sexual orientation.[11]
[12]See e.g., former CFPB senior leader David Silberman’s February 10, 2025 article in Open Banker.
[13] CFPB and the Biden Justice Department were reaching in their interpretation of the fair lending laws in “modern day redlining”.
[14]See also generally, Seth Frotstein, CFPB’s former General Counsel’s speech at the 2024 Poverty Law Conference.
[15]But not so funny for the compliance professionals frustrated by CFPB inaction.
[16] I love this Mass Mutual commercial with Ryan O’Reilly and Juusi Saaros of the NHL’s Nashville Predators. In a locker room chat, O’Reilly, the team captain asks Saaros, the goalie, about his financial goals. Saaros just stares straight ahead and says over and over, “No goals.” Ironically, Saaros, is, in fact, so laser focused on his “no goals” goal that he’s incapable of hearing what O’Reilly was asking him about. Also, Saaros is from Finland and his English might not be so great. P.S. I’m told by my Swedish friends that all Fins carry knives.
[17]For that matter, many of the remedies crafted by the CFPB and Biden Justice Department in recent fair lending consent orders involved lending programs that themselves might contradict these developments. State laws may differ, however.
[18] Such as either a SCOTUS decision on disparate impact or new statutory clarifications of the federal fair lending laws.
Brian Levy is an attorney with Katten & Temple, LLP licensed in Illinois and Wisconsin who writes the free Levy’s Mortgage Musings blog available at www.mortgagemusings.com. Mr. Levy can be reached by email at blevy@kattentemple.com. Mr. Levy’s blog is copyrighted and presented by Chrisman Commentary with permission. All rights are reserved.