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Mortgage Banking Update - February 19, 2026

February 19, 2026

February 19 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, our lawyers cover the new FAIR Act, HUD’s revised foreclosure bidding process for FHA loans, Connecticut's heightened enforcement of minors’ data privacy, consumer bankruptcy findings about financial risk in America, and much more.

 

Podcast Episode: Debt’s Grip: What Consumer Bankruptcy Reveals About Financial Risk in America

On this episode of the Ballard Spahr Consumer Finance Monitor Podcast, we examine consumer debt and bankruptcy through the lens of Debt’s Grip: Risk and Consumer Bankruptcy (University of California Press, 2025), by Pamela Foohey, Robert M. Lawless, and Deborah Thorne.

Based on decades of research from the Consumer Bankruptcy Project, the nation’s most comprehensive study of bankruptcy filers, Debt’s Grip goes beyond aggregate data to document the lived experience of financial distress. The book shows how illness, job loss, aging, family structure, debt collection, and racial inequality converge to push households toward bankruptcy and what that reveals about how financial risk is allocated in the U.S. economy.

Rather than treating bankruptcy as a personal failure, the authors demonstrate how policy choices over time shifted economic risk from institutions to individuals, leaving many households one unexpected expense away from crisis. Those risks fall unevenly, with Black families, single mothers, and older Americans disproportionately affected.

The Authors

  • Pamela Foohey, Allen Post Professor of Law, University of Georgia School of Law, is a principal investigator with the Consumer Bankruptcy Project and a leading scholar on bankruptcy and financial distress.
  • Robert M. Lawless, Max L. Rowe Professor of Law, University of Illinois College of Law, is a nationally recognized empirical scholar of bankruptcy and consumer finance and a principal investigator of the Consumer Bankruptcy Project.
  • Deborah Thorne, Professor of Sociology at the University of Idaho, brings a critical sociological lens, foregrounding the voices and experiences of bankruptcy filers. She also is a principal investigator of the Consumer Bankruptcy Project.

Podcast Highlights

In the episode, we discuss:

  • Why people actually file for bankruptcy
  • The debts most likely to lead to financial collapse
  • How households struggle to stay afloat before filing
  • The role of debt collection and litigation
  • How people come to see bankruptcy as a solution
  • Policy reforms that could reduce reliance on credit during hardship

Key Takeaways

  • Bankruptcy is rarely about irresponsibility. It is often the endpoint of systemic risk-shifting.
  • Financial distress is structurally unequal. Race, age, gender, and health matter.
  • Filers exhaust alternatives before filing. Bankruptcy reflects resilience under pressure, not moral hazard.
  • Policy choices matter. Stronger safety nets and a more humane bankruptcy system can reduce financial harm.

Conclusion

Debt’s Grip offers a rigorous, data-driven, and deeply human account of consumer bankruptcy in America. It challenges entrenched myths and provides valuable insight for policymakers, regulators, and industry participants alike.

We thank Professors Foohey, Lawless, and Thorne for joining the podcast and for their important contribution to the field.

Consumer Finance Monitor is hosted by Alan Kaplinsky, senior counsel at Ballard Spahr, and the founder and former chair of the firm’s Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

To listen to this episode, click here.

Consumer Financial Services Group

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Podcast Episode: A Sea Change in New York Consumer Protection Law: Inside the FAIR Act

In the episode of the Consumer Finance Monitor podcast we are releasing today, we examine what may be the most consequential development in New York consumer protection law in nearly half a century: the enactment of the New York State Fair Business Practices Act (the FAIR Act).

Signed into law in December 2025 and taking effect on February 17, 2026, the FAIR Act represents the first comprehensive overhaul of New York General Business Law § 349 in almost 50 years. Long focused primarily on deceptive acts and practices, Section 349 has now been expanded to expressly prohibit unfair and abusive business practices as well—bringing New York law far closer to the federal UDAAP framework under the Consumer Financial Protection Act.

To explore what changed, why it matters, and how the law will be enforced in practice, Alan Kaplinsky (founder and former leader of the Consumer Financial Services Group at Ballard Spahr LLP and now senior counsel and host of Consumer Finance Monitor) is joined by two senior officials from the New York Attorney General’s Bureau of Consumer Frauds and Protection who were directly involved in shaping and implementing the statute:

  • Jane Azia, Chief of the Bureau of Consumer Frauds and Protection
  • Alec Webley, Assistant Attorney General and one of the attorneys who helped shepherd the FAIR Act through the legislative process

What followed was a wide-ranging and unusually candid discussion of the statute’s origins, scope, enforcement implications, and practical lessons for businesses operating in, or affecting, New York.

To listen to this episode, click here.

Consumer Financial Services Group

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GAO Issues Initial Report Addressing CFPB Reorganization and Downsizing Efforts

The U.S. Government Accountability Office (GAO) recently released a report in response to a request by members of Congress that it assess the effect of recent stop-work orders, workforce reductions, contract terminations, and other related actions on the CFPB’s ability to fulfill its statutorily mandated functions. The report addresses the status of CFPB’s significant reorganization and downsizing efforts from February through August 2025. The GAO will examine the effects of these actions as the subject of a future report. The report was requested by Senators Andy Kim, (D-N.J.), and Elizabeth Warren, (D-Mass.), and Representatives Bill Foster, (D-Ill.), Al Green, (D-Tex.), and Maxine Waters, (D-Cal.).

The report itself mainly details timelines of various actions at the CFPB related to the reorganization and downsizing of the agency. As noted by the GAO, the actual analysis of the effect of the actions will be set forth in a future report. The report is based on publicly available information, including court filings involving the CFPB, Federal Register notices, press releases, executive orders, memoranda from the Office of Personnel Management and Office of Management and Budget, and nonpublic CFPB documents during the February through August 2025 period.

Among the developments described in the report are:

  • The dismissal of 16 enforcement actions with prejudice and one without prejudice out of the 34 actions that were ongoing as of January 30, 2025.
  • A planned reduction in force of approximately 88 percent of the CFPB’s workforce, including 90 percent of the supervision division and 80 percent of the enforcement division.
  • The rescission or withdrawal of 70 agency guidance documents and proposed rules.
  • The temporary closure of the CFPB headquarters and the termination of all regional office leases.

Comments made by the GAO in the introduction to the report on its interactions with the CFPB are interesting. The GAO advises that to further gather information “[w]e . . . requested a meeting with CFPB officials and information on agency contracts, workforce changes, and supervisory and other activities. CFPB declined to meet with us and did not provide requested information, citing ongoing litigation.”

The GAO notes that it provided the CFPB a draft of the report for its review and comment and advises that:

“CFPB expressed concerns with the accuracy of the report, stating that the report contains inaccurate, biased, and incomplete information. CFPB stated that the agency was constrained by ongoing litigation from providing all the information and data necessary to correct the report and that it had cooperated and attempted, where possible, to provide accurate data and context. Further, CFPB characterized our timelines for requesting information as limited and arbitrary.”

Addressing the litigation issue, in a footnote the GAO advises that “[w]e informed CFPB that the existence of litigation does not limit our 31 U.S.C. § 716(a)(1) authority to obtain information required for our audits, nor does it minimize CFPB’s 31 U.S.C. § 716(a)(2) obligation to provide such information to us.” The cited statutory provisions are among the provisions governing the GAO, with the first provision granting the GAO authority to obtain information from federal agencies, and the second provision obligating federal agencies to provide the information.

The GAO then states:

“We stand by the accuracy of the facts presented in our report, which are based on publicly available information including court dockets and Federal Register notices. As consistently explained in our communications to CFPB leadership throughout this audit, we conducted this work within the scope of our authority in an independent and nonpartisan manner, and we take no position on the policies underlying CFPB leadership’s views about the agency’s past actions or the size of the agency. Our focus was on presenting the dates and events that took place at CFPB between February and August 2025.

In accordance with our engagement process and agency protocols, we provided CFPB multiple opportunities to inform our work and ensure that we had complete and accurate information. CFPB did not take advantage of any opportunity to provide us with information it considered relevant to our work, only noting that ongoing litigation prevented it from doing so.”

The report includes as an enclosure a letter from the CFPB to the GAO expressing its concerns regarding the draft report. The letter provides that report, “initiated at the behest of hyper-partisan Democrat Members, is full of biased and incomplete information, continuing its efforts to undermine President Trump’s and Acting Director Vought’s efforts to reform and right-size the CFPB, which has a history of weaponization.”

Richard J. Andreano, Jr. and John L. Culhane, Jr.

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FTC Intends to Issue ANPRM on Negative Option Plans

The FTC has announced that it has submitted an Advance Notice of Proposed Rulemaking (ANPRM) regarding negative option plans to the OMB Office of Information and Regulatory Affairs (OIRA) for review—an indication that the commission may be interested in revisiting click-to-cancel issues. The OIRA has disclosed that it received the ANPRM on February 4.

Once the OIRA completes its review, which under Executive Order 12866 can take up to 10 working days, the FTC can publish the ANPRM in the Federal Register. Until then, the precise details of the information and data that the FTC wants to review before issuing any proposed amendments to the negative option rule will not be publicly available.

However, since the negative option rule is a trade regulation rule, the FTC’s own rules require the ANPRM to describe the aspects of negative option plans on which the FTC is focusing, the objectives the FTC seeks to achieve with any proposed amendments, and possible regulatory alternatives under consideration. The ANPRM must also invite commenters to provide suggestions or to propose alternative methods by which the FTC may achieve its objectives.

It seems likely that the FTC will seek comments on the economic impact of any proposed rulemaking as well, since the FTC is required to perform a regulatory cost-benefit analysis when a proposed rule will have an annual effect on the national economy surpassing $100 million. The FTC’s failure to conduct a preliminary regulatory analysis of costs and benefits is what doomed the prior click-to-cancel amendments to the negative option rule in litigation before a panel of the Eighth Circuit.

In the meantime, state regulators are free to use their UDAP authority under state laws modeled on Section 5 of the FTC Act or their UDAAP authority under Section 1042 of the Consumer Financial Protection Act to attack any subscription practices that they deem to be unfair, deceptive, or abusive to consumers.

In a related development, as we previously reported, New York City Mayor Zohran Mamdani has expressed interest in a plan that would make it easier for city residents to cancel their subscriptions.

Mamdani has issued an executive order that:

  • Calls for coordination among agencies, including the city’s Law Department and others, such as the New York Attorney General’s Office to “ensure maximum impact in combatting subscription traps.”
  • Directs the Department of Consumer and Worker Protection to make recommendations to the City Council on ways to fight “subscription tricks and traps.”
  • Empowers the city to use the full tools and authorities to crack down on “subscription tricks and traps.”
  • Directs the consumer and worker protection agency to monitor, investigate and enforce violations related to ”subscription tricks and traps.”
Richard J. Andreano, Jr. and John L. Culhane, Jr.

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CFPB Soliciting Comments on How to Improve Consumer Response Intake Form

In the request for comments, the CFPB states that it is soliciting comments on how to improve its Consumer Response Intake Form. The CFPB advises that Consumer Response Intake Form is designed to help consumers in submitting complaints, inquiries and feedback.

Consumers may complete and submit information using the Intake Form on the Bureau’s website. Respondents also may request that the Bureau mail a paper copy of the Intake Form to them so that they may mail it back to the CFPB or submit complaints by telephone.

The CFPB states that “[t]he questions within the Intake Form prompt respondents for a description of, and key facts about, the complaint at issue, the desired resolution, contact and account information, information about the company they are submitting a complaint about, and previous action taken to attempt to resolve the complaint.”

The CFPB is asking for comments on:

  • “Whether the collection of information is necessary for the proper performance of the functions of the CFPB, including whether the information will have practical utility.”
  • “The accuracy of the CFPB’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used.”
  • “Ways to enhance the quality, utility, and clarity of the information to be collected.”
  • “Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.”

The CFPB made the same request for comments in a November 28, 2025, Federal Register notice, and the comment period for that request ended on January 27, 2026. Comments on the current request must be received by March 2.

The CFPB also revised its consumer complaint portal to address the need for consumers disputing information in their consumer report to first submit a complaint directly to the consumer reporting agency (CRA), and to advise that consumers may not submit a complaint to the CFPB disputing information in their consumer report unless they have submitted a complaint directly to the CRA and the dispute with the CRA is no longer active or more than 45 days have elapsed since the dispute was filed. The added language is as follows:

  • “WHEN YOU MUST FIRST DISPUTE THE COMPLAINT WITH THE CRA:
    • Before submitting a complaint against a credit or consumer reporting agency about inaccurate or incomplete information on your consumer report, you are required by law to first dispute the information directly with the credit or consumer reporting agency. 15 U.S.C. 1681i(a) & (e). You can learn more about how to submit a direct dispute here.
    • To submit a complaint, you must attest that the information you have provided is true to the best of your knowledge and belief, and, if your complaint to a CRA concerns inaccurate or incomplete information, that you have already submitted your dispute to a CRA more than 45 days ago or that your dispute with the CRA is no longer pending.
    • Furthermore, if you submit a complaint to the CFPB against a credit or consumer reporting agency about inaccurate or incomplete information without first disputing the information directly with that company:
      • They may not respond to your complaint
      • The CFPB will discontinue processing your complaint if the company alerts us that you did not first dispute the information directly with them
    • DO NOT SUBMIT UNLESS YOUR DISPUTE WITH THE CRA IS NO LONGER PENDING OR 45 DAYS HAVE ELAPSED SINCE YOU FILED THAT DISPUTE:
    • Even if you have already submitted a dispute and can attest that the information you have provided is true to the best of your knowledge and belief, do not submit a complaint to the CFPB about inaccurate or incomplete information while your dispute with the relevant credit or consumer reporting agency remains active. Credit and consumer reporting agencies are required to respond to disputes submitted to them within 30-45 days. By prematurely submitting your complaint here, you are impeding the system from serving other consumers who have correctly followed the process.”
Consumer Financial Services Group

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HUD Revised Foreclosure Bidding Process for FHA Loans

The U.S. Department of Housing and Urban Development (HUD) recently revised the requirements for bidding at a foreclosure sale and for utilizing Claims Without Conveyance of Title (CWCOT), including Post-Foreclosure Sales Efforts through the issuance of Mortgagee Letter 2026-03. The changes apply to all single-family forward mortgages under the Title II program, except for Hawaiian Home Lands Mortgages and Insured Mortgages on Indian Land. The changes may be implemented immediately, but must be implemented for foreclosure sales scheduled on or after April 29, 2026.

HUD advises that through the Mortgagee Letter it is:

  • Restating its policy that a mortgagee may only participate in the CWCOT program if the mortgagee bids the Commissioner’s Adjusted Fair Market Value (CAFMV) at the foreclosure sale. The CAFMV is the estimate of the fair market value of the property, less adjustments that may include, without limitation, HUD’s estimate of holding costs and resale costs that would be incurred if title to the property were conveyed to HUD.
  • Now permitting mortgagees to bid below the CAFMV at a foreclosure sale and then elect to convey the property to HUD or forgo filing a claim.
  • Eliminating the exemption for small servicers under which they were permitted, but not required, to use the CAFMV. Prior to the current changes, services that were not small servicers had to use the CAFMV for all foreclosure sales and post-foreclosure sales efforts associated with defaulted mortgages when eligible for CWCOT. HUD explained that it is eliminating the exemption because small servicers can now convey the property to HUD instead if they are unable to meet the CAMFV bidding requirement.

Addressing the reasons for the changes, HUD advises that:

“The use of CAFMV ensures that this alternative to conveying the Property adequately offsets the losses to the Mutual Mortgage Insurance Fund (MMIF). In many cases, HUD potential losses exceed what a state allows to be included in a credit bid. For example, when the Borrower has received a Partial Claim, the amount of the debt would not be included in the Mortgagee’s credit bid, and HUD has limited opportunity to recapture those losses. Nevertheless, HUD recognizes the challenges Mortgagees face when required to bid an amount greater than the credit bid at a foreclosure sale.”

The revised language provides that when a mortgagee pays an amount over the credit bid in order to acquire a property at the CAFMV, HUD will reimburse the mortgagee for 100 percent of the amount paid over the credit bid.

The policy changes will be incorporated into Handbook 4000.1. The revised language to be inserted into the Handbook is set forth in the Mortgage Letter, which includes language to reflect the changes and also reorganize existing language.

Richard J. Andreano, Jr.

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Colorado Files Opposition to Plaintiffs’ Rehearing Petition in Opt-Out Litigation

As we reported previously, a petition for rehearing en banc was filed by the plaintiff bank trade associations in National Association of Industrial Bankers v. Weiser. In that case, the panel’s 2-1 decision held that a loan is “made” for purposes of the opt-out provision in Section 525 of Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) in both the state where the bank is located and the borrower’s state, meaning that Colorado interest rate limits will apply to loans made to Colorado residents by out-of-state state-chartered depository institutions.

The 10th Circuit directed Colorado to file a response to the rehearing petition. In its response, Colorado argued that the plaintiffs’ claim of a circuit split with Jessup v. Pulaski Bank, 327 F.3d 682 (8th Cir. 2003) was unfounded. Colorado asserted that the panel decision correctly distinguished Jessup on the basis that it involved a different statute with a different purpose, and that the Jessup opinion was based entirely on Chevron deference to an OCC opinion letter, which would now be improper in light of Loper Bright.

Colorado also argued that, contrary to the plaintiffs’ contentions in their rehearing petition, the panel properly applied Supreme Court precedents on express preemption and correctly found that the text of Section 525 of DIDMCA is unambiguous.

In addition, Colorado argued that rehearing is reserved for “extraordinary” cases, and this appeal “concerns a routine issue of statutory interpretation.” Colorado further asserted that the opinion will not threaten the dual banking system, and contended that Iowa’s opt-out of DIDMCA over 40 years ago has not caused any significant problems. Also, Colorado asserted that most loans by out-of-state state chartered banks to Colorado borrowers fall below Colorado’s interest rate caps, and therefore “[i]t is only a few state-chartered banks who partner with high cost fintech lenders” who will be affected by the panel’s decision.

Finally, Colorado argued that the various policy arguments raised by the amici curiae supporting the rehearing petition (namely, the FDIC, OCC, ABA and Bank Policy Institute, and 20 States) should be addressed to Congress.

It is noteworthy that none of the various amici curiae who supported Colorado’s position at the merits briefing stage filed briefs in opposition to rehearing.

There is no way of knowing when the 10th Circuit will decide the rehearing petition. In the meantime, the issuance of the mandate is stayed, so the trial court’s injunction against enforcement of the opt-out statute still remains in effect.

Burt M. Rublin and Alan S. Kaplinsky

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Return to Normalcy at the NLRB? New General Counsel and Board Members Signal that Stability and Addressing Backlog Are Priorities

With the December 2025 appointment of two Board members and a new General Counsel, the National Labor Relations Board (NLRB or the Board) is up and running again. Recent developments from the General Counsel’s office and the Board signal important guidance about the Agency’s priorities as President Trump’s appointees take the helm.

Case Backlog

On January 28, 2026, General Counsel Crystal Carey issued GC Memo 26-02, announcing departure from the traditional opening memo listing cases or topics that the General Counsel wishes to revisit and reconsider. Instead, Carey said her priority is to address the backlog of cases, not add to it. Carey wrote:

“For too long we have been stuck in a cycle where justice to all parties is delayed in an effort to overturn precedent, overstep the boundaries of the National Labor Relations Act, restrict the rights of employees to freely obtain information and make informed decisions about representation, and interfere with the ability of parties to freely enter into various types of otherwise lawful employment-related agreements and settlements.”

Carey’s statement is perceived by some as a jab at Board leadership under the Biden administration, which prioritized reversal of longstanding precedent and pushed novel theories of law.

Regions were instructed to continue following the standard categories of cases that require mandatory submission to the NLRB’s Division of Advice, such as matters involving novel legal theories, remedies, efforts to overturn precedent, or circuit splits. In the coming weeks, Carey will issue guidance on operational focused topics such as case processing, settlements and remedies, “all aimed at achieving consistent, fair and prompt resolution of charges across the Agency.”

Carey’s memo signals a possible return to normalcy at the Agency – and perhaps to longstanding precedent. For some, this may be a welcome change, as compared to navigating the ever-changing federal labor law landscape.

Expanded Remedies Remain

On January 28, the NLRB’s three-member Board declined an opportunity to reconsider its 2022 decision in Thryv, Inc., 372 NLRB No. 22. That decision expanded the standard remedy in unfair labor practice cases to include compensation for “direct or foreseeable pecuniary harms” resulting from an unlawful action. Previously, the remedy for unfair labor practice cases had been a “make whole” remedy, usually limited to back pay and reinstatement of a terminated employee.

In a footnote in the case, Republican Board Members James Murphy and Scott Mayer stated that they would apply Thryv in the absence of a three-member majority to overrule it, indicating an appetite to reverse Thryv only when the full three-member complement of Republican Board members has been appointed. Currently two Board seats remain vacant.

For now, employers are still subject to the broader remedy for unfair labor practices.

New Intake Protocol

On December 23, 2025, the NLRB issued an internal memo announcing a new intake protocol for incoming charges that will require unions and employees to clear certain hurdles before the charges are assigned for investigation.

Under the updated protocol:

  • New charges are placed on an “unassigned” list instead of being immediately assigned to a Board agent.
  • Charging parties must submit supporting information (such as a timeline, relevant documents, and a list of witnesses) generally within two weeks.
  • If a charging party does not cooperate or fails to provide evidence supporting a credible claim, the charge may be dismissed.
  • Certain urgent matters (such as those involving potential injunctions) are still assigned immediately.

Following issuance of this revised intake protocol, the NLRB responded to what it called a “general misunderstanding” of the reasons for the updates. The NLRB asserted that the two-week deadline for charging parties to provide supporting information is consistent with longstanding practice. The NLRB further explained that the purpose of the new protocol is to relieve the backlog of cases and reduce the need for follow-up after a case is assigned.

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Ballard Spahr’s Labor and Employment Group regularly advises employers in NLRB proceedings. We assist clients in assessing risk, responding to charges, and navigating changes in agency enforcement practices.

Rebecca A. Leaf, Brian D. Pedrow, and Ryan B. Ricketts

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Justice Department and State of Texas Settle Allegations Against Colony Ridge

The Justice Department and State of Texas recently entered into a settlement agreement with Colony Ridge Development, LLC and related entities (Colony Ridge) to settle allegations that Colony Ridge violated certain federal and state laws. The Justice Department had alleged violations of the Equal Credit Opportunity Act (ECOA) and Fair Housing Act (FHA). Texas had alleged violations of the Texas Deceptive Trade Practices Act (DTPA), Consumer Financial Protection Act (CFPA) and Interstate Land Sales Full Disclosure Act (ILSA). In entering into the settlement agreement, Colony Ridge expressly denied any wrongdoing alleged by, or that could have been alleged by, the Justice Department or the State of Texas.

As previously reported, in December 2023 the CFPB and Justice Department filed a joint complaint against Colony Ridge in the U.S. District Court for the Southern District of Texas alleging that Colony Ridge engaged in discriminatory targeting of Hispanic consumers with predatory financing and other unlawful conduct. Texas separately filed suit against Colony Ridge in the same court alleging false, misleading, and deceptive sales, marketing, and lending practices. In September 2024, the court granted Colony Ridge’s motion to dismiss one of the FHA claims and denied its motion to dismiss all other claims of the CFPB and Justice Department. The allegations focused on Colony Ridge conduct in connection with the development of lots for sale in Liberty County, Texas and the financing of purchases of those lots.

The settlement agreement contains many typical terms for matters of this type and includes terms that are not so typical. It specifically requires Colony Ridge to comply with the “intrastate sales” exception to the ILSA by “requiring purchasers to present an unexpired Texas-issued driver’s license, a Texas-issued identification card, a limited-term Texas-issued driver’s license issued after January 1, 2025, or an unexpired passport and valid visa issued or renewed after January1, 2025.”

In a press release announcing the settlement, Assistant Attorney General Harmeet K. Dhillon stated “[t]his DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration.” The atypical terms include terms that appear to reflect the Justice Department’s characterization of Colony Ridge’s operations as a predatory scheme ultimately encouraging illegal immigration. Specifically, Colony Ridge agreed to:

  • Work with law enforcement to confirm that buyers are not on a published terrorism watch list and are not known members of a transnational criminal organization.
  • Expend an aggregate amount of $20 million to enter into and/or come into compliance with local, state, and federal agreements, to increase law enforcement presence and effectiveness within the Terrenos Houston Subdivisions. In particular, the funds will be expended to carry out law enforcement activities, which may include:
    • General local law enforcement, including, primarily, funding additional delegated immigration enforcement authority from the federal government to the Liberty County Sheriff’s Office and Liberty County Constable offices;
    • Construction of a Texas Department of Public Safety and/or County Constable sub-station on-site within the Terrenos Houston Subdivisions;
    • Funding for at least two additional full-time law enforcement officers to patrol the development, who shall be funded and allocated consistent with the existing Law Enforcement Services Agreement between a property owners association and Liberty County; and
    • The purchase of law enforcement equipment, gear, and vehicles for items and services associated with the property owners of Colony Ridge, and at the discretion of the Liberty County Constable and Liberty County Sheriff’s Office.
  • Create and present for the United States’s and Texas’s non-objection, a discount program designed to meaningfully encourage peace officer residency within the Terrenos Houston Subdivisions.

As previously reported, under Acting Director Vought the CFPB has successfully sought the early termination of several redlining consent orders, which requires approval of the court, although the motion for the early termination of the Lakeland Bank consent order, which is being opposed, is still under consideration by the court. The Colony Ridge settlement agreement provides for a three-year term. Apparently, to avoid the need for court approval of an early termination of the settlement agreement, the agreement includes the following provision:

“If, at any point, the United States and the State of Texas determine that Colony Ridge has substantially complied with this Agreement, including by fulfilling this Agreement’s terms and exhibiting a sincere and demonstrated commitment to future remediation, the United States and the State of Texas may jointly terminate this Agreement prior to its expiration date.”

Presumably, any future fair lending settlements involving the CFPB and/or Justice Department during the Trump administration will include a similar provision.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

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Connecticut Signals Heightened Enforcement of Minors’ Data Privacy

State privacy enforcement is entering a new phase, and Connecticut is quickly becoming a jurisdiction to watch. In its third annual Connecticut Data Privacy Act (CTDPA) enforcement report, the Office of Attorney General William Tong disclosed for the first time that it has opened multiple active investigations into how messaging platforms, gaming services, and AI chatbot providers collect, use, and protect the personal information of children and teens.

This report is the first to reflect enforcement under Connecticut’s expanded minors’ privacy protections, which took effect in October 2024. For companies operating nationally, the timing is critical. Connecticut is joining California and Colorado in elevating minors’ data protection to a top enforcement priority, signaling a broader, coordinated shift in state-level privacy oversight.

Where Connecticut Is Focusing Its Investigations

  1. Messaging Apps

The Connecticut AG issued a notice of violation and inquiry letter to a messaging platform widely used by children and teens, citing deficiencies in privacy notice disclosures and opt-out mechanisms. The investigation reflects a growing focus on whether platforms:

  • know or deliberately ignore the presence of minor users;
  • restrict adults from sending unsolicited messages to minors; and
  • obtain valid consent for the collection and use of minors’ precise geolocation data.

The message is clear: platforms cannot remain passive when minors are on their services.

  1. Gaming Platforms

In May 2025, Connecticut AG sent an inquiry letter to a popular gaming provider focused on the potential sale and targeted advertising use of children’s personal data. Testing of the provider’s iOS and Android apps purportedly revealed the use of advertising SDKs commonly associated with targeted advertising. In a subsequent report, the AG stated:

“Companies may not willfully blind themselves to users’ age and must adjust their tracking technologies to account for the heightened protections afforded to minors under the CTDPA.”

Connecticut has also joined several other states in sending a joint letter to gaming studios and their subsidiaries, identifying alleged deficiencies in privacy disclosures and consent processes related to minors’ data. Separately, the Connecticut AG is investigating a digital advertising data broker that offers SDKs to app developers—including apps directed at minors—for potential violations of both the CTDPA and the Connecticut Unfair Trade Practices Act (CUTPA).

  1. AI Chatbots

Perhaps most notable is the Connecticut AG’s ongoing investigation into a technology company that provides a chatbot platform for alleged harm to minors due to certain design features. Connecticut also recently joined a coalition of 42 Attorneys General in sending letters to major artificial intelligence companies demanding more quality control and other safeguards over chatbot products. Existing federal and state privacy, data breach, and unfair and deceptive acts laws apply in this space, and Connecticut has made clear it will use them.

New Rules for Minors’ Data in 2026

Connecticut’s legislature has significantly strengthened the CTDPA’s protections for minors, with key amendments set to take effect in July 2026. Key changes include:

  • A ban on targeted advertising and the sale of minors’ personal data. Consent will no longer be a permissible workaround.
  • A prohibition on “addictive design features.” Controllers may not use design features intended to significantly increase, sustain, or extend a minor’s use of an online service.
  • Strict limits on precise geolocation data. Collection will be permitted only when strictly necessary to provide the relevant service.
  • Mandatory minors-specific privacy impact assessments. These must be completed before engaging in high-risk processing, not after.
  • Expanded definitions of covered harms. The law now expressly includes physical violence, material harassment, and sexual abuse or exploitation.

Additional amendments taking effect in July 2026 include lowered applicability thresholds, so that all sensitive data processing and all sales of personal data will be covered. The definition of “sensitive data” has been expanded to include disability or treatment information, nonbinary or transgender status, certain financial and government identifier information, and “neural” data. Companies will be required to disclose in their privacy notices whether they collect, use, or sell personal data for the purpose of training large language models. The enforcement report further signals potential future legislative action, including tighter limits on “publicly available” data, a standalone genetic privacy law, AI-specific safeguards for children, and stronger universal opt-out mechanisms.

Practical Takeaways for Businesses

In light of Connecticut’s ramped-up enforcement activity and the July 2026 amendments, there is little room to delay. Companies should consider taking the following steps now:

  • Audit minors’ data flows. Identify where children’s data is collected, shared, or monetized, and unwind practices that will soon be prohibited. Minors-specific data protection assessments should already be underway.
  • Reassess age detection and verification practices. The Attorney General has explicitly rejected “willful blindness” to users’ ages. Companies must evaluate whether they have actual or constructive knowledge of minor users and whether their controls align with CTDPA expectations.
  • Scrutinize product design for “addictive” features. Autoplay, infinite scroll, streaks, and engagement-driven notifications may pose compliance risks under the 2026 amendments.
  • Treat AI and chatbot products as high-risk. Connecticut has made clear that AI is not a regulatory blind spot. Existing privacy, security, and unfair practices laws will be enforced.
  • Strengthen vendor oversight. Recent multistate enforcement actions demonstrate rising expectations around third-party risk management, including robust contractual controls, ongoing monitoring, and swift remediation when vendors deviate from agreed practices.

Connecticut’s February 2026 disclosure of active investigations into messaging apps, gaming platforms, and AI chatbots marks a significant escalation in state-level enforcement focused on children’s privacy. With new prohibitions on targeted advertising, data sales, addictive design features, and geolocation collection set to take effect in July 2026, businesses have a narrow window to achieve compliance.

Companies that process personal data of Connecticut residents, particularly children and teens, should act now to assess their compliance posture and address any gaps before the next round of enforcement actions.

Brianna Howard, Gregory P. Szewczyk, and J. Matthew Thornton

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California’s Newest Surveillance Pricing Probe

Two customers shopping for the same product on the same website at the same time may see two different prices. This scenario is a growing reality in today’s data-driven marketplace, and California regulators are paying attention. On Data Privacy Day 2026, California Attorney General Rob Bonta announced a new investigative sweep targeting “surveillance pricing”—a practice in which businesses use personal information to set individualized prices for consumers. For online retailers and service providers, this probe raises important questions about how customer data is collected, used, and disclosed.

The California Consumer Privacy Act (CCPA) secures several key privacy rights for California consumers, including:

  • The right to know about the personal information a business collects about them and how it is used and shared;
  • The right to delete personal information collected from them (with some exceptions);
  • The right to opt-out of the sale or sharing of their personal information, including via the Global Privacy Control (GPC); and
  • The right to nondiscrimination for exercising their CCPA rights.

Of particular relevance to pricing practices, the CCPA includes a “purpose limitation” that restricts how businesses can use personal information. Under this principle, businesses are limited in their use of personal information to purposes that are consistent with the reasonable expectations of consumers. Businesses must disclose in their privacy policies how they collect, use, share, and sell consumers’ personal information, and these policies must include information on consumers’ privacy rights and how to exercise them.

A Track Record of Active Enforcement Under the CCPA

This enforcement of CCPA actions is not new to Attorney General Bonta. He has consistently demonstrated commitment to robust enforcement of California’s privacy law and has targeted a range of data practices. In July 2025, the Attorney General announced the largest CCPA settlement to date resolving allegations that a company’s use of online tracking technology on its website violated the CCPA. In 2024, the CCPA investigative sweep focused on compliance by streaming services and connected TVs. In August 2022, the Attorney General announced a settlement resolving a sweep of companies that were allegedly out of compliance with the user-enabled privacy control (GPC) signal to stop the sale of personal information. Other sweeps have addressed the location data industry, employee information, opt-out requests on mobile apps, and business loyalty programs.

What Is Surveillance Pricing?

In plain terms, “surveillance pricing” is the use of consumers’ personal information to set targeted, individualized prices for products and services.

This can result in different consumers being offered different prices for the same product at the same time, often without any disclosure to the consumer. Unless a business discloses that it uses a consumer’s personal information to set prices, surveillance pricing may be invisible to the consumer.

What Businesses Are Being Asked to Disclose

The California AG’s inquiry letters seek detailed information on businesses’ data-driven pricing practices, including:

  • Companies’ use of consumer personal information to set prices;
  • Policies and public disclosures regarding personalized pricing;
  • Any pricing experiments undertaken by companies;
  • Measures companies are taking to comply with algorithmic pricing, competition, and civil rights laws.

Attorney General Bonta emphasized that practices like surveillance pricing “may undermine consumer trust, unfairly raise prices, and when conducted without proper disclosure or beyond reasonable expectations, may violate California law.” Similar enforcement has been implemented by the Federal Trade Commission and New York.

Although the current sweep is centered on surveillance pricing in retail, grocery, and hospitality, the California AG’s public statements make clear that enforcement is driven by the nature of the data use, not the sector. The CCPA’s purpose-limitation and reasonable-expectations principles have been construed to apply broadly, and other uses of personal information that significantly influence economic terms for consumers could come under scrutiny.

Legal Risks Under the CCPA Key Considerations for Businesses

Businesses that may use data to set individualized prices, directly or indirectly, should consider the following:

  • Review data use practices: Assess whether consumer personal information is used for pricing decisions and whether such use is disclosed in a manner consistent with CCPA requirements.
  • Update privacy disclosures: Ensure privacy policies accurately reflect pricing practices and purposes for data collection.
  • Assess reasonable expectations: Consider whether targeted pricing strategies align with what consumers would reasonably expect based on the business’s relationship with them.
  • Prepare for enforcement: If contacted by the California AG’s office, respond promptly and ensure records, data mapping, and compliance documentation are up to date.

The California AG’s surveillance pricing probe marks a significant development in privacy enforcement. Privacy enforcement is no longer just about data collection and sharing; it is now about how businesses use consumer data to influence prices. As Attorney General Bonta stated, “Consumers have the right to understand how their personal information is being used, including whether companies are using their data to set the prices that Californians pay.” Businesses would be well advised to review their data practices now and ensure that privacy disclosures and pricing strategies are aligned with California’s evolving regulatory expectations.

Brianna Howard, J. Matthew Thornton, and Gregory P. Szewczyk

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Former New Jersey Attorney General Matt Platkin Launches Law Firm to Continue Fighting for the Public Good

We were honored to host former New Jersey Attorney General Matt Platkin on our live webinar on January 17, 2025, where I conducted a “fireside chat” with him that, because of its popularity, was later repurposed on our weekly podcast show, Consumer Finance Monitor. At that time, Matt spoke passionately about the evolving landscape of consumer protection and how his office was preparing to fill the anticipated gap left by efforts to scale back the Consumer Financial Protection Bureau (CFPB).

Fast forward to today and Matt has taken that commitment to public-interest legal work into the private sector. Former Attorney General Matt Platkin has launched his own law firm, Platkin LLP, bringing together a team of seasoned litigators from his former office to tackle some of the most pressing legal challenges of our time.

Located in New Jersey, Platkin LLP is positioning itself as a mission-driven boutique firm focused on high-impact civil litigation and investigation. The firm’s practice areas include consumer protection, antitrust, technology accountability, gun violence prevention, and democracy protection—fields that echo many of the priorities Matt emphasized during his tenure as Attorney General.

In a widely shared article in The New Jersey Globe announcing the launch, Matt said the firm would use “the law to drive meaningful change” and continue the work of holding powerful corporations and institutions accountable when they harm the public. He was recently appointed a distinguished Scholar in Residence at the Center for Law and Public Trust at NYU Law School.

Platkin’s move to a private practice public interest firm seems to part of a trend by former government enforcement lawyers to do that. Recently, Eric Halperin, the former head of Enforcement at the CFPB during the Biden administration (along with two of his colleagues from the CFPB joined Protect Borrowers as senior fellows to launch a strategic enforcement project focusing on a new initiative that will use legal and policy levers to challenge products and practices that exploit workers, consumers, and small business owners.

Takeaway: This trend underscores a point that we have been telling our consumer financial services clients during the Trump administration. While the CFPB does not pose a threat at least for the remainder of the Trump administration, state Attorneys General and private class action and public interest lawyers with government enforcement experience have filled part of that void and pose a real threat to banks and consumer financial services companies that are no longer giving priority to compliance responsibilities.

Alan S. Kaplinsky

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Moreno-Davidson Bill Seeks to Reverse 10th Circuit and Restore Interest Rate Exportation Parity Between State and National Banks

On February 12, Senator Bernie Moreno (R-OH) and Representative Warren Davidson (R-OH) introduced the American Lending Fairness Act of 2026, legislation designed to restore long-standing federal interest rate exportation authority for state-chartered banks and credit unions engaged in interstate lending. The bill directly responds to the 10th Circuit’s controversial 2-1 decision in National Association of Industrial Bankers v. Weiser which held that Colorado’s opt-out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), pursuant to Section 525, requires out-of-state, state-chartered banks and credit unions to comply with Colorado’s usury limits when lending to Colorado residents.

If enacted, the legislation would effectively reverse that decision and clarify that a state’s opt-out cannot be used to prevent state-chartered depository institutions located in states that have not opted out of DIDMCA from exporting the interest rate permitted by their home state.

This issue sits at the center of an ongoing, high-stakes dispute between the State of Colorado and out-of-state state banks engaged in lending to Colorado residents.

The Broader Dispute: Colorado’s Opt-Out and Interstate Lending

Since its enactment in 1980, Section 521 of DIDMCA has permitted state-chartered, FDIC-insured banks to export the interest rate permitted by the state where the bank is located to borrowers nationwide — a framework designed to preserve competitive parity with national banks and support the dual banking system.

In 2023, Colorado exercised its authority under Section 525 of DIDMCA to “opt out” of Section 521. The state has argued that its opt-out means that out-of-state, state-chartered banks making loans to Colorado residents must comply with Colorado’s interest rate caps, even if those banks are located in states that permit higher rates.

Industry participants — including the National Association of Industrial Bankers — challenged Colorado’s position, arguing that the opt-out was intended to apply only to banks chartered in the opting-out state, not to banks chartered elsewhere. In their view, allowing a single state to impose its rate caps on out-of-state banks would undermine decades of settled expectations, disrupt interstate lending markets, and erode competitive parity between state and national banks.

The 10th Circuit’s 2-1 Decision

In 2025, a divided panel of the United States Court of Appeals for the 10th Circuit sided with Colorado. The majority concluded that Colorado’s opt-out requires out-of-state, state-chartered banks to comply with Colorado usury limits when lending to Colorado residents.

The unprecedented ruling marked a significant departure from the prevailing understanding of DIDMCA’s exportation framework and created uncertainty for state-chartered institutions engaged in interstate lending. A petition for rehearing en banc is currently pending before the full 10th Circuit. If granted, the panel opinion would be vacated. The rehearing petition is supported by the FDIC, OCC, American Bankers Association, Bank Policy Institute, and 20 states.

Regardless of the outcome of that petition, the introduction of the American Lending Fairness Act signals that Congress may step in to resolve the dispute legislatively.

What the American Lending Fairness Act Would Do

According to the sponsors, the bill would:

  • Restore federal interest rate exportation authority for state-chartered banks and credit unions in interstate lending;
  • Preserve states’ authority to regulate institutions chartered within their own borders;
  • Reinforce competitive parity between state-chartered and national banks;
  • Prevent states from using DIDMCA opt-outs to impose their interest rate caps on out-of-state lenders.

In effect, the legislation would clarify that a state’s opt-out does not authorize it to regulate the interest rates charged by state-chartered banks located in other states that have not opted out.

Industry Reaction

The bill has drawn broad support from banking, fintech, and credit union trade associations, including:

  • The American Bankers Association
  • The American Financial Services Association
  • The Financial Technology Association
  • The Online Lenders Alliance
  • The American Fintech Council
  • The Consumer Bankers Association

Supporters characterize the bill as restoring long-standing precedent, protecting consumers’ ability to shop across state lines, and preserving the integrity of the dual banking system. They argue that a patchwork regime in which each state could effectively project its rate caps nationwide would shrink credit markets and raise borrowing costs.

Critics of exportation, including Colorado officials and consumer advocates, view the issue differently. They contend that state opt-outs reflect deliberate policy choices to protect residents from high-cost credit and that allowing exportation in the face of an opt-out undermines state sovereignty.

Why This Matters

At stake is far more than Colorado’s interest rate caps. The dispute goes to the core of interstate banking and the competitive balance between state- and nationally chartered institutions.

If the 10th Circuit’s panel decision stands and is replicated elsewhere, other states could pursue similar strategies. Conversely, if Congress enacts the American Lending Fairness Act, it would reaffirm a uniform federal standard for interstate rate exportation and significantly curtail the ability of states to extend their usury laws beyond their borders.

For state-chartered banks, fintech partnerships, and credit unions, the outcome will shape lending models and compliance frameworks nationwide. For borrowers, the practical effects may be seen in the availability — and pricing — of credit products.

The coming months will determine whether this conflict is resolved by the courts or by Congress. Either way, the long-standing architecture of interstate lending under DIDMCA is now squarely in focus.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

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Looking Ahead

RESPRO33 | OneHomeSource2026

March 5-6, 2026 | Clearwater Beach Marriott Resort, Clearwater, FL

CFPB Update

March 6, 2026 – 10:15 AM - 10:45 AM

Speaker: Richard J. Andreano, Jr.

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