Trump’s CFPB shake-up sparks mortgage industry concerns

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President Donald Trump, Elon Musk and other members of the current administration are well underway with their quest to declaw the Consumer Financial Protection Bureau, with actions ranging from widespread layoffs to contract terminations.

The volatility in recent weeks have seen seasoned agency officials opt for retirement amid future layoff rumors and a general mission to dismantle the CFPB. Noteworthy departures include Mark McArdle, an assistant director that led the CFPB’s mortgage markets team since 2017 and CFPB Operations Chief of Supervision David Bleicken, who spent nearly 14 years at the bureau primarily as deputy associate director for the former division of supervision, enforcement and fair lending. 

Officials with the Justice Department have stood behind acting CFPB Director Russell Vought and his direction for the agency, which has been to thin out its headcount, reduce policies on diversity, equity and inclusion, and suspend overall operations — all in the name of reducing federal spending.

“As acting director Vought noted in a letter to the Federal Reserve, the ‘Bureau’s new leadership will run a substantially more streamlined and efficient bureau,'” the Justice Department said in its 40-page brief. “The predicate to running a ‘more streamlined and efficient bureau’ is that there will continue to be a CFPB.”

Read more: DOGE details its cuts at HUD, VA, CFPB

Earlier this month, Musk’s Department of Government Efficiency reported through its Wall of Receipts it had terminated more than 300 contracts at the CFPB. Total value estimates include roughly $10 million from support for Office of Minority and Women Inclusion trainings, $1.2 million for Tableau licenses and more than $117,000 for LinkedIn recruiter licenses for the CPFB Office of Enforcement Investigators.

Noteworthy cancellations that impact the CFPB’s mortgage operations feature a roughly $292,000 contract with Optimal Blue for mortgage lock data, $2.1 million with Informa Business Intelligence for mortgage data at the Library of Congress and a $1 million contract with Black Knight for mortgage data. 

This could change in the coming weeks, as litigation in the lawsuit between CFPB union leaders and the agency begins to skew towards halting future actions.

District Court Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said Tuesday that she is opting towards an injunction against CFPB leadership to stem the outflow of talent.

“I want to preserve an agency that could be revived, if necessary. … I don’t think we can have nothing,” Berman Jackson said. “That’s what I’m leaning to, I’ve not decided.” 

Read more: Judge leans toward halting Trump CFPB actions

Dive into the latest CFPB news below to learn more about how the agency’s future will create ripples across the mortgage industry.

CFPB lawsuit reveals planned layoff of 1,175 employees

Emails submitted as part of an ongoing lawsuit between acting CFPB Director Russell Vought and the National Treasury Employees Union revealed agency leaders planned to lay off more than 1,100 employees from the offices of supervision and enforcement.

While legal officials representing the Justice Department say Vought is operating within the boundaries of the law under the Trump Administration, union leaders allege that he is illegally dismantling the CFPB.

Employees mulling whether or not to voluntarily leave the agency await the potential confirmation of Jonathan McKernan, a Republican board member of the Federal Deposit Insurance Corp., as the CFPB’s next permanent director. McKernan was approved in the Senate Banking Committee by a 13-11 party line vote and now awaits approval from the full Senate.

Read more: CFPB leaders planned to gut the bureau, fire 1,175 employees

Al Drago/Bloomberg

McKernan is one step closer to running the CFPB

On March 6, members of the Senate Banking Committee approved Jonathan McKernan’s nomination to be the next director of the CFPB, a major step in McKernan’s journey to the leadership role.

The 13-11 affirmative party line vote pushes the decision to the full Senate, with expectations that Republican support of McKernan will propel the former Federal Deposit Insurance Corp. board member into the top spot at the CFPB — and back onto the FDIC board.

“If confirmed, I will fully execute the law … and perform each of its other statutorily assigned functions,” McKernan said in his opening statement during his confirmation hearing. “The CFPB will do this by centering its regulation on real risk to consumers and by focusing its enforcement on bad actors.”

Read more: McKernan’s nomination to lead CFPB moves forward

CFPB union leaders claim layoffs, office closure are illegal

Unionized CFPB employees remain adamant that the Trump Administration’s waves of layoffs, office closures and work stoppages are all against the law.

Claims focus on how in addition to President Donald Trump’s allegedly illegal appointment of Office of Management and Budget Director Russell Vought as acting CFPB director, Vought has superseded the Administrative Procedures Act through the firings.

“These actions are not merely a policy shift or a routine transition; they represent an attempt, unprecedented in American history, to unilaterally eliminate an agency that Congress established and that the Supreme Court upheld last year,” the union said in a memo. “No statute authorizes the defendants to stop the CFPB from doing what Congress said it must, and they have offered no reasoned explanation for their extraordinary efforts to wind down the agency,”

Read more: CFPB’s union says bureau is being illegally dismantled

Christopher Dilts/Bloomberg

CFPB rescinds enforcement action against TransUnion

A 2022 CFPB lawsuit against TransUnion and a former executive has been dropped, just one of numerous court cases being dismissed under new orders from the Trump Administration.

The case followed the alleged violation of a 2017 complaint against the two parties, wherein TransUnion and Equifax purportedly deceived customers on the cost of credit monitoring and reporting services. Roughly two years later, the CFPB reported it had received roughly 100 complaints from customers claiming TransUnion unknowingly enrolled them in monthly monitoring services.

On Feb. 28, the bureau announced the case was “voluntarily dismissed against all defendants” with prejudice, preventing it from being revived against TransUnion at any point in the future.

“We are pleased with the dismissal of this case, which reflects our long-standing view of the facts and our ongoing work to support consumers,” TransUnion said in a statement. 

Read more: CFPB dismisses enforcement action against TransUnion

Rocket, Vanderbilt Mortgage freed from CFPB lawsuits

The CFPB unwound its legal pursuits against Rocket Homes and brokerage The Mitchell Group, as well as Vanderbilt Mortgage & Finance, late last month.

The case against Rocket Homes, a subsidiary of Rocket Companies, and The Mitchell Group stems from a December complaint alleging the firms orchestrated a kickback scheme that would strengthen origination volume — which both firms staunchly denied.

Vanderbilt’s lawsuit centered around claims that the unit of Berkshire Hathaway subsidiary Clayton Homes instituted improper lending practices that led to the bankruptcy of some borrowers, such as ignoring troublesome factors during underwriting and drafting bloated expense estimates for homeowners.

Both lawsuits were dismissed with prejudice, which means they can’t be brought back at a later date.

Read more: CFPB dismisses Rocket, Vanderbilt Mortgage lawsuits