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Just hours after becoming the acting director of the Consumer Financial Protection Bureau, Treasury Secretary Scott Bessent imposed a freeze on all bureau activities except those approved by Bessent or required by law.
The freeze includes the bureau’s recent list of proposed and final rules and litigation, such as a preliminary rule to improve mortgage closing costs for consumers, 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 assist borrowers in navigating forbearance programs.
Bloomberg Law first reported on the freeze on Tuesday based on an email sent by Bessent to CFPB employees. “As Acting Director, Secretary Bessent is committed to appropriately leading the agency until new leadership is established,” the email stated. “[The freeze is] to ensure alignment with the Administration’s goals.”
Addressing mortgage closing costs
The CFPB’s efforts to control mortgage closing costs faced obstacles. The bureau initiated a public inquiry last year to identify the reasons behind the increasing closing costs, including fees for title insurance and credit reporting. Former CFPB Director Rohit Chopra highlighted that inflated closing costs added pressure on borrowers already struggling to save enough for down payments and keep up with rising mortgage rates and home prices.
Mortgage and title industry groups pushed back against the CFPB’s proposal, with the Mortgage Bankers Association questioning the bureau’s legal authority to regulate closing cost fees.
“The root causes of current homeownership and affordability challenges are primarily low housing inventory and pandemic-related economic conditions. Increasing closing costs are a result of these issues and are not the main driver of affordability problems,” the MBA stated in a letter to the CFPB in August.
“We are concerned that the Bureau’s focus on mortgage closing costs is misguided and that they are misrepresenting certain disclosed and necessary mortgage-related fees as ‘junk fees’ in their communications,” the group added.
“There is a concern that the CFPB may have already formed conclusions about the RFI questions and the validity of these charges based on previous statements,” they remarked.
Similarly, the American Land Title Association criticized the CFPB for categorizing title insurance and settlement services as “junk fees,” arguing that consumers receive clear disclosures about these fees in their closing costs and that these fees represent a small portion of the total home purchase cost.
“Grouping title insurance and settlement services under ‘junk fees’ contradicts the White House’s own definition, which focuses on the disclosure of charged fees,” ALTA stated. “CFPB’s own research from 2020 demonstrated that these disclosures effectively educate consumers about closing costs. The CFPB commended its rule for improving consumer access to key information, comparing terms and costs, and assessing mortgage offers.”
“The title industry plays a crucial role beyond issuing insurance policies by addressing title chain defects, unpaid taxes, liens, and fraud schemes to protect consumers,” they added.
In his final posts on X, the platform formerly known as Twitter, Chopra indicated his intention to push ahead with the rule. He highlighted that borrowers had received over $120 million in refunds in 2024 due to the CFPB’s investigation into mortgage fees.
Protecting borrowers’ interests
Although the mortgage closing cost rule did not progress beyond the public comment phase, the CFPB had finalized rules to tighten underwriting for Property Assessed Clean Energy (PACE) improvement loans and amend the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) to assist borrowers in navigating forbearance programs.
The PACE rule under Regulation Z mandated PACE lenders to assess borrowers’ loan repayment capabilities and provide them with alternative financing options. PACE loans enable homeowners to make energy-efficient home upgrades like solar panel installations. PACE loans are typically funded by bond issues authorized by local governments but are often provided to homeowners by private lenders collaborating with home improvement contractors to promote these loans to consumers, as previously explained in an Inman article.
PACE loans typically come with 20-year repayment terms paid through property taxes. The CFPB noted that PACE loans raise homeowners’ property taxes by an average of $2,700 per year, increasing the risk of mortgage default for some homeowners. Even if a homeowner manages higher mortgage payments, they may still face challenges when refinancing or selling their home due to the property-tied nature of PACE assessments.
The MBA, National Consumer Law Center (NCLC), and the Housing Policy Council approved of Regulation Z but expressed concerns about PACE lenders retaining a “super lien priority,” prioritizing repayment over other mortgage liens.
“Despite these rules, PACE loans remain ‘super lien priorities,’ which can harm the housing market and borrowers who might struggle to refinance or recover their investment during home sales due to the priority status of the PACE obligations,” the groups jointly stated in December. “We will continue collaborating to address these challenges and any emerging issues during the rule’s implementation in states with PACE programs.”
Meanwhile, the forbearance rule under Regulation X aimed to simplify servicing rules for borrowers seeking assistance. The rule amended RESPA’s 2013 Mortgage Servicing Rules, requiring mortgage servicers to explore all viable loss mitigation options for borrowers who completed a loss mitigation application to prevent foreclosure. At the onset of the COVID-19 pandemic, the CFPB issued an emergency rule allowing servicers to offer loss mitigation options without requiring a formal application from borrowers.
The forbearance rule expanded mortgage servicers’ loss mitigation obligations, clarified review timelines, and prohibited servicers from initiating foreclosure actions, charging additional fees, or penalties (except for late fees) once a borrower requested assistance. It also mandated servicers to provide oral and written translation services for non-English proficient borrowers or those whose loans were marketed in languages other than English.
The PACE rule was set to take effect on March 1, 2026, while the final version of the forbearance rule was expected earlier this year, with enforcement scheduled at least a year later. However, both rules are currently on hold alongside other CFPB final rules, including capping overdraft limits at $5 and preventing medical debt from appearing on consumers’ credit reports.
Rocket Mortgage, other servicers await developments
In addition to rule proposals, the CFPB, under former director Rohit Chopra, initiated legal action against mortgage servicers for alleged kickback schemes and discriminatory practices against borrowers.
The CFPB sued Draper & Kramer Mortgage Corporation on Jan. 17, accusing the company of situating all its offices in predominantly white neighborhoods in Boston and Chicago, neglecting marketing efforts in majority-Black and Hispanic regions. This led to disproportionately low loan applications and originations from Black and Hispanic borrowers.
In the previous year, the CFPB filed lawsuits against servicers for offering predatory reverse mortgages to elderly homeowners, purposely submitting inaccurate mortgage data, and targeting Hispanic buyers through unlawful land sales. However, the CFPB’s lawsuit against Rocket Mortgage attracted significant media attention, with allegations that the servicer violated RESPA regulations by providing kickbacks in exchange for referrals and pressuring agents and brokers to promote the company’s products.
Rocket Mortgage vehemently denied the CFPB’s accusations and denounced them as “false and misleading.”
“The claim that homebuyers paid more when dealing with Rocket Homes is untrue,” the company asserted. “Furthermore, the idea that Rocket Homes penalized real estate brokers or agents for helping clients compare rates and select the best lender is also unfounded.”
“Director Chopra’s attempt to advance his political agenda before the change in administrations is a reckless and inappropriate use of public resources,” they contended. “This baseless lawsuit is just one of many legal actions taken in haste by a desperate Chopra hungry for attention.”
Inman has contacted both CFPB and Rocket for updates on the lawsuit, but they have not responded.
Future Prospects
The CFPB has not provided further details on the freeze, which also includes halting public communications.
Polunsky Beitel Green Senior Associate Peter Idziak shared his view with Inman that Secretary Bessent is unlikely to eliminate the bureau, contrary to suggestions made by X owner Elon Musk. However, Idziak anticipates that Bessent will focus on delaying the compliance dates for the Nonbank Registration Rule, which mandates nonbank financial institutions to register with the CFPB and report their exposure to specific regulatory orders.
The deadline has passed for larger nonbank institutions, as reported by Mortgage Professionals in January. Yet, the deadline for smaller nonbank institutions is set for April 14 — a deadline that the MBA requested the CFPB to extend before Chopra’s departure.
“I also expect the CFPB to promptly address the MBA’s request and postpone the compliance dates under the Nonbank Registration Rule,” Idziak explained in an email to Inman. “I believe the Bureau will also move to rescind the rule, as it exemplifies the costly and unnecessary regulations that the Trump administration seeks to eliminate.”
He also foresees Bessent suspending the rule preventing medical debt from appearing on consumer reports, even though it could negatively impact mortgage approval rates.
“Bessent took action to halt the rule prohibiting medical debt on consumer reports,” he stated. “The rule has faced opposition from credit reporting agencies and Republican lawmakers, indicating a strong possibility for the CFPB to repeal the rule, should Congress not intervene under the Congressional Review Act.”
“In issuing the rule, the CFPB believed that banning medical debt from consumer reports could lead to 22,000 more approved mortgages annually, so rescinding it could impede originations,” he added.
Email Marian McPherson
