The Consumer Financial Protection Bureau (CFPB) announced that it will be shifting its focus towards addressing pressing threats to consumers, rather than implementing the nonbank registry rule. This decision comes after various industry responses to the proposed rule.
Timeline of change
In late 2022, the CFPB introduced a proposed rule that required nonbank entities to report public agency enforcement actions and court orders for inclusion in the nonbank registration system (NBR). The final rule was published in July 2024, with an implementation date of Sept. 16, 2024. Originally, smaller nonbanks were required to register by April 14, 2025, with all covered nonbanks expected to comply by July 14, 2025.
The rule faced criticism from mortgage trade groups, particularly regarding its perceived redundancy. Independent mortgage banks (IMBs) already report similar information through the Nationwide Multistate Licensing System and Registry (NMLS), which requires disclosure of regulatory and court actions from the past 10 years.
Industry response
Following the freeze on the nonbank registry rule, mortgage trade groups, such as the Community Home Lenders of America (CHLA) and the Mortgage Bankers Association (MBA), expressed their support for the decision. CHLA stated that the freeze provides regulatory relief for smaller lenders from duplicative registry requirements, allowing them to focus on originating loans.
MBA, which had previously requested a delay in compliance deadlines, criticized the rule for being costly and duplicative. They suggested that the CFPB could have integrated enforcement information on mortgage companies into the consumer-facing database maintained by the Conference of State Bank Supervisors’ NMLS Consumer Access portal.
MBA’s senior vice president of residential policy and strategic industry engagement, Pete Mills, stated that they will continue to monitor the CFPB’s next steps and advocate for the rescission of the regulation through issuing an NPR.