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Within hours of being named the Consumer Financial Protection Bureau’s acting director, Treasury Secretary Scott Bessent froze all of the bureau’s activities except those approved by Bessent or required by law.
The freeze applies to the bureau’s latest list of proposed and final rules and litigation, which include an early-stage rule on improving mortgage closing costs for consumers and two final-stage rules on tightening underwriting for Property Assessed Clean Energy (PACE) improvement loans and amending the Real Estate Settlement Procedures Act and the Truth in Lending Act to help borrowers navigate forbearance programs.
Bloomberg Law broke news of the freeze on Tuesday after obtaining an email Bessent sent to CFPB employees. “As Acting Director, Secretary Bessent is committed to appropriately stewarding the agency pending new leadership,” the email read, according to Bloomberg Law. “[The freeze is] to promote consistency with the goals of the Administration.”
Controlling mortgage closing costs
The CFPB didn’t get far on its plan to control mortgage closing costs. The bureau issued a public inquiry last year to identify the root causes of the rise in closing costs, which include fees for title insurance and credit reporting. Former CFPB Director Rohit Chopra said inflated closing costs put undue pressure on borrowers who are already struggling to save adequate down payments and keep up with rising mortgage rates and home prices.
Mortgage and title groups pushed back on the CFPB’s proposal, with the Mortgage Bankers Association questioning the CFPB’s legal authority to guide closing cost fees.
“The fundamental drivers of the current barriers to homeownership and affordability are low housing inventory and pandemic-induced macroeconomic conditions. Rising closing costs are a consequence of these issues, and in any event, are not a primary driver of affordability challenges,” the MBA said in a letter issued to the CFPB in August.
“MBA is concerned that the Bureau’s focus on mortgage closing costs is misguided and that they are inaccurately characterizing certain disclosed, required and necessary mortgage-related fees as ‘junk fees’ in its press releases, blogs, circulars, advisory opinions, and public speeches.”
“We fear previous statements suggest that the CFPB may have already arrived at predetermined conclusions about the questions in this RFI and the validity of these charges,” the group added.
Echoing the MBA, the American Land Title Association said the CFPB was wrong for characterizing title insurance and settlement services as “junk fees.” The group said consumers receive clear disclosures about the fees included in their closing costs and argued these fees are a small portion of the total cost of homebuying.
“Lumping title insurance and settlement services into the category of ‘junk fees’ conflicts with the White House’s own definition, which cites the lack of disclosure of the fee being charged,” ALTA said in a statement. “CFPB’s own research, from as recently as 2020, shows these disclosures are working to educate consumers about closing costs. The CFPB report praised its own rule for improving consumers’ ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers.”
“The title industry does more than just issue an insurance policy, performing vital work to cure defects in the chain of title, including unpaid taxes, child support and other liens, as well as combating fraud schemes like wire and deed fraud to protect consumers,” they added.
In his last posts on X, the platform formerly known as Twitter, Chopra signaled that he would’ve charged forward with the rule. The former director said borrowers received more than $120 million in refunds in 2024 as a result of the CFPB’s investigation into mortgage fees.
Keeping borrowers from going under
While the rule on mortgage costs didn’t make it past public comment, the CFPB had reached the final stage for two rules on tightening underwriting for Property Assessed Clean Energy (PACE) improvement loans and amending the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) to help borrowers navigate forbearance programs.
The PACE rule under Regulation Z requires PACE lenders to evaluate borrowers’ ability to repay their loans and provide a disclosure outlining other financing options. PACE loans enable homeowners to make energy-efficient home upgrades, such as installing solar panels. PACE loans are typically funded by bond issues authorized by local governments but are often provided to homeowners by private lenders that may partner with home improvement contractors to market the loans to consumers, a previous Inman article explained.
PACE loans often come with 20-year repayment terms that are paid back through property taxes. The CFPB said PACE loans increase homeowners’ property taxes by an average of $2,700 per year, putting some homeowners at greater risk of defaulting on their mortgages. Even if a homeowner can keep up with higher mortgage payments, the CFPB said they’ll often run into issues when refinancing their mortgage or selling their home, as PACE assessments are tied to the property, not the property owner.
The MBA, the National Consumer Law Center (NCLC), and the Housing Policy Council praised Regulation Z but said they were still concerned about PACE lenders keeping their “super lien priority,” which means they’ll be made whole before any other lien holder on the mortgage.
“[The rule] does not change the fact that PACE loans are provided as a ‘super lien priority’ through the tax assessment process, which is damaging to the housing market and to borrowers who may not be able to refinance or recoup their investment at the time of a sale due to the PACE obligation’s priority status,” the groups said in a joint statement in December. “We will continue to work together to address such challenges as well as any that might arise during the implementation of the rule in states with PACE programs.”
Meanwhile, the forbearance rule under Regulation X sought to simplify and streamline servicing rules for borrowers seeking assistance. The rule amended RESPA’s 2013 Mortgage Servicing Rules, which requires mortgage servicers to assess “all viable loss mitigation options” for borrowers who’ve completed a loss mitigation application to avoid foreclosure. During the early days of the COVID-19 pandemic, the CFPB issued an emergency rule that allowed servicers to offer loss mitigation options without borrowers submitting a loss mitigation application.
The forbearance rule expanded mortgage servicers’ loss mitigation obligations to borrowers, clarified the loss mitigation cycle review timeline, and prohibited servicers from moving ahead on foreclosure activities and charging additional fees and penalties, except for late fees, once a borrower requests assistance. The rule also required servicers to provide oral and written translation services for borrowers who aren’t proficient in English or whose loans were marketed in a language other than English.
The PACE rule was slated to go into effect on March 1, 2026, and the CFPB was expected to issue a final version of the forbearance rule early this year with enforcement scheduled at least 12 months later. However, both rules are now on the back burner alongside other CFPB final rules on capping overdraft limits to $5 and keeping medical debt off consumers’ credit reports.
Rocket mortgage, other servicers off the hook — for now
In addition to proposing rules, the CFPB, under former director Rohit Chopra, filed several lawsuits against mortgage servicers for alleged illegal kickback schemes and discriminating against borrowers.
The CFPB filed suit against Draper & Kramer Mortgage Corporation on Jan. 17 for allegedly locating all of its offices in majority-white neighborhoods in Boston and Chicago and avoiding marketing efforts in majority-Black and Hispanic areas — all of which led Draper & Kramer to have disproportionately low loan applications and originations from Black and Hispanic borrowers.
Last year, the CFPB filed several lawsuits against servicers for issuing predatory reverse mortgages to elderly homeowners, purposely submitting inaccurate mortgage data, and targeting Hispanic buyers through illegal land sales. However, CFPB’s lawsuit against Rocket Mortgage gained the most traction in the media, with the bureau accusing the servicer of breaking RESPA regulations by allegedly providing kickbacks in exchange for referrals and requiring agents and brokers to steer their clients toward the company’s products.
Rocket Mortgage vehemently denied the CFPB’s claims and told Inman they “are false and a distortion of reality.”
“The accusation that homebuyers paid more when working with Rocket Homes is a lie,” the company told Inman in December. “Additionally, the notion that Rocket Homes penalized real estate brokers or agents for helping clients compare rates and choose the best lender for them is also a lie.”
“Director Chopra’s transparent ploy to bolster his political agenda before the changing of administrations is a reckless and shocking misuse of public resources,” they added. “This flimsy lawsuit is just the latest in a tidal wave of legal actions by a desperate Chopra hungry for headlines.”
Inman has reached out to CFPB and Rocket on the current status of the lawsuit. Neither party has responded.
What’s next?
The CFPB hasn’t provided any additional information on the freeze, as it also includes halting public communications.
Polunsky Beitel Green Senior Associate Peter Idziak told Inman he believes Secretary Bessent won’t seek to eliminate the bureau, as X owner Elon Musk has suggested. However, Idziak said Bessent will likely prioritize postponing the compliance dates for the Nonbank Registration Rule, which requires nonbank financial institutions to register with the CFPB and report when they are subject to certain regulatory orders.
The deadline has already passed for larger nonbank institutions, Mortgage Professionals reported in January. However, the deadline for small nonbank institutions is on April 14 — a date the MBA asked the CFPB to push back before Chopra’s firing.
“I also expect the CFPB to quickly act on MBA’s request and postpone the compliance dates under the Nonbank Registration Rule,” Idziak said in an emailed statement to Inman. “I believe the Bureau will also act to rescind the rule, as it’s a prime example of the costly and unnecessary regulations that the Trump administration is looking to cut.”
He also expects Bessent to suspend the rule that keeps medical debt off consumer reports despite it having a potentially negative impact on mortgage application rates.
“Bessent acted [Tuesday] to suspend the rule that bans medical debt on consumer reports,” he said. “The rule has faced opposition from credit reporting groups and Republicans in Congress, so there is a strong likelihood the CFPB acts to repeal the rule if Congress itself doesn’t disapprove it under the Congressional Review Act.”
“In issuing the rule, the CFPB stated it believed the ban could lead to 22,000 additional mortgages being approved every year, so its rescission could have a negative impact on originations,” he added.
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