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The Consumer Financial Protection Bureau (CFPB) on Wednesday issued a final rule to immediately rescind the nonbank registry rule and a proposal to create a registry of nonbank contract terms and conditions. The decision was applauded by mortgage trade groups.
The nonbank registry rule was published in the Federal Register in July 2024 and set to take effect in September 2024 during the Biden administration. It required nonbank financial services providers to register certain enforcement actions and court orders with a new federal database.
The main criticism from mortgage trade groups centered on what they characterized as the rule’s redundancy. Independent mortgage banks (IMBs) already report similar information through the Nationwide Multistate Licensing System and Registry (NMLS). After pushback, the CFPB froze the rule in April.
The CFPB also decided to withdraw a 2023 rule that would have required the registry of supervised nonbanks that use form contracts to impose terms and conditions that waive or limit consumer legal protections.
In his justification for the rescissions published in the Federal Register, CFPB acting director Russell Vought raised concerns about the costs the rules impose on regulated entities and the expenses CFPB would incur for maintaining the registries.
He also mentioned “speculative and unquantified benefits to consumers” and said the tools were not necessarily “effective to monitor and reduce potential risks.”
Mortgage trade groups supported the CFPB’s decision.
“The offender registry requirement is redundant with NMLS requirements, and the form contracts registration requirement asks IMBs to disclose waivers of consumer rights that IMBs are not legally allowed to waive in the first place,” Scott Olson, executive director at the Community Home Lenders of America (CHLA), said in a written comment.
Mortgage Bankers Association (MBA) president and CEO Bob Broeksmit said in a statement that the nonbank registry rule would have “created compliance burdens without improving consumer protection or market transparency.”
“We are also pleased to see the CFPB withdraw its unnecessary contracts terms registry, as mortgage contracts are generally standard forms or governed by federal law and the registry would have provided little public benefit,” Broeksmit said. “These moves allow lenders and servicers to stay focused on responsibly delivering affordable mortgage credit to consumers.”
