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Mortgage Banking Update - July 9, 2026

July 9, 2026

July 9 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, our lawyers examine HUD’s modification of FHA mortgage loan policies, new requirements for new hires in Colorado, remand of the CFPB restructuring dispute back to federal district court, and other notable updates.

All content can be found previously published on Ballard Spahr’s Insights page.

 

Podcast Episode: Coerced Debt: New York’s Landmark Law and Emerging Trends Nationwide – Part 2

On May 12, 2026, we produced a 90-minute webinar in which we explored one of the most important and rapidly developing issues in consumer financial services law: coerced debt and the emerging legislative efforts designed to address it. The webinar has been re-purposed into a two-part podcast series, the first of which was released this past Thursday, June 11th, and the second of which is being released today, Thursday, June 18th. Alan Kaplinsky, Founder, former Chair for 25 years and now Senior Counsel of the Consumer Financial Services Group at Ballard Spahr, LLP hosted and moderated this discussion.

The discussion examines the growing recognition that individuals, often survivors of domestic violence, elder abuse, human trafficking, or other forms of coercive control, can be manipulated, threatened, or deceived into incurring debt without meaningful consent. The program focuses in particular on New York’s newly enacted coerced debt statute, which creates a framework allowing consumers to challenge the enforceability of debts incurred through coercion and requires creditors and debt collectors to investigate such claims. This topic was covered in Part 1.

The episodes feature an outstanding panel of experts from academia, legal services organizations, consumer advocacy groups, and private practice. Professor Angela Littwin of the University of Texas School of Law discusses her groundbreaking research on coerced debt, including empirical studies demonstrating the prevalence of the problem and the inadequacy of traditional legal remedies such as divorce proceedings, bankruptcy, and fraud defenses. Representatives from CAMBA Legal Services, Brooklyn, New York, Divya Subramanyam and Naomi Young, explain how the New York statute is intended to operate in practice, including the evidentiary requirements imposed on survivors, creditor obligations upon receipt of a coerced debt claim, and the practical challenges survivors face in seeking relief.

Part 2 of the program being released today begins with a discussion of the broader national landscape. Carla Sanchez-Adams of the National Consumer Law Center discusses similar legislative initiatives developing across the country, including laws enacted in states such as California, Texas, Connecticut, Minnesota, Maine, Illinois, and Vermont, as well as pending legislation elsewhere. Carla and the panel further analyze the interaction between coerced debt claims and existing federal laws such as the Fair Credit Reporting Act and Truth in Lending Act, while also addressing ongoing efforts to expand federal protections.

Finally, Ballard Spahr attorney, Dan Wilkinson, offers an industry perspective on the significant operational and compliance issues created by these laws for banks, finance companies, debt collectors, and other financial institutions. The discussion highlights the challenges of identifying coerced debt claims, conducting investigations while protecting survivor confidentiality, training frontline personnel, and balancing consumer protection concerns with fraud prevention and risk management obligations.

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: Cutting Out the Middleman: Why Fintechs, Crypto Firms, and Payments Companies Are Seeking Their Own Bank Charters – Part 1

At a May 19, 2026 Ballard Spahr webinar, “Cutting Out the Middleman: The Surge in FinTech Applications to Charter Banks, Industrial Banks and National Trust Companies,” a distinguished panel of banking, fintech, crypto, and consumer financial services professionals explored one of the most important developments currently reshaping the financial services industry: the growing movement by fintech companies, payments firms, lenders, and crypto-native businesses to obtain their own banking charters rather than relying on traditional bank partnerships.

The message from the panel was clear: we are witnessing a significant shift in how nonbank financial services companies are thinking about regulation, growth, and market access.

Speakers:

  • Moderator: Alan Kaplinsky, senior counsel; founder and former leader of Consumer Financial Services Group, Ballard Spahr
  • Guest: Lee Reiners, Lecturing Fellow, Duke Financial Economics Center; founder and editor-at-large of The FinReg Blog; founder and host, The FinReg Pod; co-host, Coffee & Crypto with Lee and Jimmie (a podcast that covers the latest developments in cryptocurrency); co-organizer of Digital Assets at Duke (annual conference about crypto assets space)
  • Scott Coleman, partner, Ballard Spahr
  • Joseph Schuster, partner, Ballard Spahr
  • Beau Hurtig, counsel, Ballard Spahr
  • Adam Maarec, counsel, Ballard Spahr

Key Takeaways

  1. A significant shift is underway. Fintechs increasingly want to internalize the benefits of banking rather than rely on partnerships.
  2. There is no one-size-fits-all charter. National banks, state banks, industrial banks, and national trust banks each serve different strategic objectives.
  3. The current environment appears unusually favorable. Regulators are showing greater openness to nontraditional applicants than at any point in recent memory.
  4. The trend extends well beyond crypto. Payments companies, lenders, fintech platforms, and other financial services providers are all exploring charter opportunities.
  5. Becoming a bank is a long-term commitment. The benefits are substantial, but so are the regulatory obligations.

Part 2 of this webinar will be released next Thursday, July 2nd.

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: Cutting Out the Middleman: Why Fintechs, Crypto Firms, and Payments Companies Are Seeking Their Own Bank Charters – Part 2

At a May 19, 2026 Ballard Spahr webinar, “Cutting Out the Middleman: The Surge in FinTech Applications to Charter Banks, Industrial Banks and National Trust Companies,” a distinguished panel of banking, fintech, crypto, and consumer financial services experts explored one of the most important developments currently reshaping the financial services industry: the growing movement by fintech companies, payments firms, lenders, and crypto-native businesses to obtain their own banking charters rather than relying on traditional bank partnerships.

The message from the panel was clear: we are witnessing a significant shift in how nonbank financial services companies are thinking about regulation, growth, and market access.

The podcast we are releasing today is part 2 of this series. We recommend that you listen to part 1 before listening to part 2.

Speakers:

  • Moderator: Alan Kaplinsky, senior counsel; founder and former leader of Consumer Financial Services Group, Ballard Spahr
  • Guest: Lee Reiners, Lecturing Fellow, Duke Financial Economics Center; founder and editor-at-large of The FinReg Blog; founder and host, The FinReg Pod; co-host, Coffee & Crypto with Lee and Jimmie (a podcast that covers the latest developments in cryptocurrency); co-organizer of Digital Assets at Duke (annual conference about crypto assets space)
  • Scott Coleman, partner, Ballard Spahr
  • Joseph Schuster, partner, Ballard Spahr
  • Beau Hurtig, counsel, Ballard Spahr
  • Adam Maarec, counsel, Ballard Spahr

Key Takeaways

  1. A significant shift is underway. Fintechs increasingly want to internalize the benefits of banking rather than rely on partnerships.
  2. There is no one-size-fits-all charter. National banks, state banks, industrial banks, and national trust banks each serve different strategic objectives.
  3. The current environment appears unusually favorable. Regulators are showing greater openness to nontraditional applicants than at any point in recent memory.
  4. The trend extends well beyond crypto. Payments companies, lenders, fintech platforms, and other financial services providers are all exploring charter opportunities.
  5. Becoming a bank is a long-term commitment. The benefits are substantial, but so are the regulatory obligations.

For firms willing to embrace that commitment, obtaining a charter may provide transformative advantages. But as our panel repeatedly emphasized, success requires careful planning, significant capital, experienced management, and a clear understanding that regulatory scrutiny continues long after the charter is approved.

To listen to this episode, click here.

Consumer Financial Services Group

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Supreme Court Overrules Humphrey’s Executor, Vastly Expands Presidential Removal Authority – But Preserves Federal Reserve Independence

In a pair of very important decisions issued today, the U.S. Supreme Court reshaped the constitutional landscape governing independent federal agencies. In Trump v. Slaughter, Court overruled the 91-year-old precedent of Humphrey’s Executor v. United States, 295 U.S. 602( 1935), and held that members of the Federal Trade Commission may be removed by the President at will, notwithstanding statutory “for cause” removal protections. On the same day, however, in Trump v. Cook, the Court declined to permit President Trump to remove Federal Reserve Governor Lisa Cook, signaling that the Federal Reserve occupies a constitutionally distinct status.

Last year, the Supreme Court issued opinions on its “shadow” docket denying Slaughter’s motion for a preliminary injunction requiring her to be reinstated as a member of the Federal Trade Commission and granting a preliminary injunction to Cook requiring that she be reinstated as a member of the Federal Reserve Board. As a result of those actions, the opinions issued today were no surprise.

Together, these decisions significantly expand presidential authority over the administrative agencies while preserving, at least for now, the longstanding independence of the nation’s central bank.

Trump v. Slaughter: The End of Humphrey’s Executor

The case arose after President Trump removed FTC Commissioners Rebecca Slaughter and Alvaro Bedoya in March 2025 without asserting any of the statutory grounds for removal— “inefficiency, neglect of duty, or malfeasance in office.” Commissioner Slaughter challenged her dismissal, relying on the Supreme Court’s landmark 1935 decision in Humphrey’s Executor, which had upheld the removal protections for FTC commissioners.

In a 6-3 decision authored by Chief Justice Roberts, the Court reversed the lower court and held that the FTC’s for-cause removal provision violates the Constitution’s separation of powers. The Court concluded that the Constitution vests the entire executive power in the President and that officers exercising executive authority must remain subject to presidential supervision and removal.

The majority emphasized that modern FTC commissioners exercise substantial executive authority, including:

  • promulgating substantive rules carrying the force of law;
  • conducting investigations;
  • initiating enforcement actions;
  • adjudicating disputes; and
  • seeking substantial civil penalties in federal court.

According to the Court, these activities constitute “the very essence of ‘execution’ of the law,” making presidential control constitutionally required.

Perhaps most importantly, the Court expressly overruled Humphrey’s Executor to the extent that decision permitted Congress to insulate executive officers from presidential removal. Chief Justice Roberts described Humphrey’s Executor as “a result in search of a rationale” and concluded that stare decisis considerations did not justify retaining the precedent.

The Court reaffirmed the “unitary executive” theory that executive officers exercising presidential power must remain accountable to the President, who in turn remains accountable to the electorate.

Potential Implications for Consumer Financial Services Regulation

The implications for federal financial regulators could be profound.

Although the CFPB’s single-director structure already lost its removal protection in Seila Law LLC v. CFPB, many other financial regulators continue to operate under statutory tenure protections. Today’s decision raises questions regarding the continued viability of those protections for officials who exercise significant executive authority.

Among the agencies potentially affected are:

  • the Federal Deposit Insurance Corporation;
  • the National Credit Union Administration;
  • the Consumer Product Safety Commission;
  • the Securities and Exchange Commission;
  • the Commodity Futures Trading Commission; and
  • other multimember commissions historically regarded as “independent.”

Whether these agencies remain insulated from Presidential removal authority will likely become the subject of future litigation.

The decision may also alter the practical dynamics of federal regulation. Future Presidents may now have substantially greater ability to reshape agency priorities by replacing commissioners whose policy views differ from those of the Administration.

Also, this opinion is the death knell of the argument made ever since the CFPB was created that the Congress should change the governance of the CFPB from a sole director to a five-member bi-partisan commission since the President could ignore any Congressional directive requiring that two members of the commission be individuals who are members of the other political party. Currently, there are only two FTC commissioners, both Republican with one serving as the Chair, even though the FTC Act provides for five commissioners. Thus, even if the CFPB leadership were changed to a multi-member, bipartisan board, a President could fire members of the opposing party from the board and retain or appoint only members of the President’s party, leaving the seats for members of the opposite party unfilled.

Trump v. Cook: The Federal Reserve Exception

Remarkably, on the very same day, the Supreme Court issued a separate 5-4 decision in Trump v. Cook declining to permit President Trump to remove Federal Reserve Governor Lisa Cook while litigation challenging her dismissal proceeds.

Chief Justice Roberts again wrote for the majority, joined by Justices Sotomayor, Kagan, Kavanaugh, and Jackson. The Court left in place a lower court order preventing Cook’s removal pending final resolution of the case. The dispute arose after President Trump attempted to remove Governor Cook based on allegations of mortgage fraud that Cook denies. The Court concluded that Cook could remain in office while her challenge continues.

Most significantly, the Court strongly suggested that the Federal Reserve occupies a special constitutional and historical position. The Slaughter majority itself expressly noted that the Court was not deciding the constitutionality of tenure protections for Federal Reserve officials and observed that the Federal Reserve may follow in the historical tradition of the First and Second Banks of the United States.

Thus, although Slaughter substantially curtails Congress’s ability to create independent agencies insulated from presidential control, the Court appears determined to preserve the Federal Reserve’s traditional independence, particularly with respect to monetary policy.

An Unresolved Tension

The juxtaposition of Slaughter and Cook creates an obvious tension.

On the one hand, the Court has embraced an expansive vision of Presidential control over executive officers and repudiated nearly a century of precedent supporting independent regulatory commissions. On the other hand, the Court has simultaneously carved out, or at least preserved, the possibility of a significant exception for the Federal Reserve.

Whether that exception ultimately extends only to monetary policy functions, or instead shields the Federal Reserve more broadly from presidential control, remains uncertain.

Looking Ahead

Trump v. Slaughter is likely to rank among the Supreme Court’s most important separation-of-powers decisions since Myers v. United States, 272 U.S. 52 (1926) (holding that a law requiring Senate approval before the President may remove executive branch officials is unconstitutional). The Slaughter decision fundamentally alters the constitutional foundation of modern administrative agencies and will almost certainly generate a new wave of litigation challenging removal protections throughout the federal government.

At the same time, Trump v. Cook demonstrates that at least a majority of the Court remains unwilling—for now—to subject the Federal Reserve to the same degree of Presidential control imposed on other regulatory agencies.

For the consumer financial services industry, these decisions could significantly affect regulatory priorities, enforcement strategies, and the future structure of federal financial regulation for years to come.

Alan S. Kaplinsky, John L. Culhane, Jr. & Richard J. Andreano, Jr.

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D.C. Circuit Sends CFPB Restructuring Dispute Back to District Court While Retaining Jurisdiction Over En Banc Appeal

In a significant procedural development in the ongoing litigation over the future of the Consumer Financial Protection Bureau (CFPB), the en banc U.S. Court of Appeals for the District of Columbia Circuit has issued an order granting a limited remand to the district court in National Treasury Employees Union v. Vought, while denying the CFPB’s request to immediately modify the stay pending appeal.

The June 19, 2026 order does not resolve the fundamental question presented in the case—namely, the extent of the Executive Branch’s authority to dramatically reduce the CFPB’s workforce and operations without congressional action. Instead, the order returns the case to U.S. District Judge Amy Berman Jackson so that she may determine whether the preliminary injunction currently preventing large-scale reductions in force should be modified, suspended, or dissolved in light of developments that have occurred since the injunction was entered.

Background

The lawsuit was filed after Acting CFPB Director Russell Vought and other Administration officials took a series of actions that employee organizations alleged were intended to dismantle the CFPB and effectively prevent it from carrying out the functions assigned to it by Congress in the Consumer Financial Protection Act.

Following extensive evidentiary proceedings, Judge Jackson issued a preliminary injunction designed to preserve the CFPB’s ability to perform its statutory duties while the litigation proceeds. The injunction prohibits the CFPB from implementing mass terminations or reductions in force that would prevent the Bureau from carrying out its congressionally mandated responsibilities. The injunction also restricts the agency from terminating employees except for cause related to individual performance or misconduct and bars the destruction of CFPB records. More broadly, the injunction was intended to preserve the operational status quo and prevent actions that could effectively disable the agency before the courts determine the legality of the Administration’s restructuring efforts.

The district court concluded that plaintiffs had demonstrated a substantial likelihood of success on their claim that the Administration lacked authority to effectively eliminate the CFPB through executive action alone where Congress has directed that the agency continue to exist and perform specified statutory functions.

The CFPB appealed, and the D.C. Circuit subsequently agreed to hear the case en banc.

The CFPB’s Revised Workforce Restructuring Plan

As previously discussed in earlier blog posts, the CFPB originally contemplated workforce reductions that would have eliminated approximately 90 percent of the Bureau’s employees, leaving only a skeletal staff.

Following the district court’s injunction and subsequent proceedings, CFPB leadership developed a revised Workforce Restructuring Plan (WRP). Under the revised plan, the Bureau would retain approximately 556 employees from a workforce that previously numbered approximately 1,723 employees and was reduced to approximately 1,174 employees at the time the WRP was submitted to the D.C. Circuit. According to the CFPB, the revised plan was designed to ensure that the Bureau could continue performing what agency leadership viewed as its core statutory functions while operating with a substantially smaller workforce.

The revised WRP contemplates significant reductions across virtually every CFPB division. However, unlike the earlier proposal, the revised plan would maintain staffing in supervision, enforcement, consumer response, rulemaking, research, legal, and operational functions at levels that the Bureau contends are sufficient to permit continued performance of its statutory responsibilities. The CFPB has argued that the revised plan reflects a comprehensive reassessment of staffing needs and addresses many of the concerns identified by Judge Jackson when she entered the preliminary injunction.

Relying on the revised WRP and other intervening developments, the CFPB sought relief from the D.C. Circuit that would permit implementation of the plan, notwithstanding the existing injunction.

The CFPB’s Motion

Acting CFPB Director Vought filed a motion with the en banc D.C. Circuit seeking either:

  1. Modification of the stay pending appeal to allow implementation of the revised Workforce Restructuring Plan; or
  2. A limited remand to the district court so that Judge Jackson could reconsider the preliminary injunction in light of the revised plan and other changed circumstances, with a 45-day deadline for the district court to rule.

The CFPB argued that several developments justified reconsideration of the injunction, including:

  • Adoption of the revised Workforce Restructuring Plan;
  • Changes relating to the Bureau’s funding and operations;
  • The Supreme Court’s recent decision in Trump v. CASA, Inc., concerning the scope of injunctive relief; and
  • Other developments occurring after entry of the preliminary injunction.

The plaintiffs opposed immediate modification of the stay but agreed that the district court should have the first opportunity to evaluate these new developments, but disagreed with the 45-day deadline.

The En Banc Court’s Ruling

The en banc court largely adopted that approach.

First, the court denied the CFPB’s motion to modify the stay pending appeal. As a result, the Bureau did not obtain immediate authority from the court of appeals to proceed with implementation of its revised workforce reduction plan.

Second, the court granted the CFPB’s request for a limited remand. The district court is now authorized to determine whether the preliminary injunction should be modified, suspended, or dissolved based solely on the intervening developments identified in the CFPB’s motion.

Importantly, the remand is narrowly circumscribed. Judge Jackson is not being asked to revisit the entire case or reconsider issues already before the en banc court. Instead, she will evaluate whether changed circumstances warrant modification of the injunction that has effectively prevented the CFPB from carrying out major workforce reductions.

Third, the court rejected the CFPB’s request to impose a 45-day deadline on the district court’s consideration of the matter. The Bureau had argued that prompt resolution was necessary, but the court expressed confidence that the district court would continue to handle the case expeditiously, as it has throughout the litigation.

Finally, the court granted the parties’ unopposed request to hold the appeal in abeyance while the district court conducts its review. Significantly, the en banc court expressly retained jurisdiction over the appeal. Once the district court rules, the parties can return to the D.C. Circuit and propose a schedule for further proceedings.

What the Order Means

The order represents neither a clear victory nor a clear defeat for either side.

For the CFPB, the ruling falls short of the immediate relief it sought. The Bureau did not obtain permission from the D.C. Circuit to proceed immediately with implementation of its revised workforce reduction plan.

At the same time, the Bureau succeeded in persuading the en banc court that the revised restructuring plan and other developments should be considered by the district court. The CFPB now has an opportunity to argue directly to Judge Jackson that the factual and legal landscape has changed sufficiently to justify modifying the injunction.

For the plaintiffs, the order preserves the existing injunction for the time being and prevents immediate implementation of the revised reduction-in-force plan. However, they must now defend the injunction in renewed proceedings before the district court.

Looking Ahead

The next phase of the litigation will unfold before Judge Jackson, who has presided over the case since its inception and has repeatedly expressed concern that the Administration’s actions could effectively dismantle an agency that Congress has directed to exist and perform specific statutory functions.

Her forthcoming decision on the limited remand could prove highly consequential. The central question will be whether the revised Workforce Restructuring Plan adequately addresses the concerns that led to entry of the preliminary injunction.

If Judge Jackson concludes that the revised plan would still leave the CFPB unable to perform its statutory duties, she may leave the injunction intact. Conversely, if she determines that the revised staffing levels would allow the Bureau to continue carrying out its congressionally mandated responsibilities, she could modify or dissolve portions of the injunction and permit some or all of the proposed workforce reductions to proceed.

Regardless of how Judge Jackson rules, the dispute will almost certainly return to the en banc D.C. Circuit, which continues to retain jurisdiction over the appeal and ultimately must resolve the broader legal questions concerning the Executive Branch’s authority to fundamentally reshape the CFPB absent congressional action.

Accordingly, while the June 19 order does not answer the fundamental questions at the heart of NTEU v. Vought, it establishes the procedural path by which those questions are likely to be resolved in the coming months. The district court will now assess whether the CFPB’s revised restructuring plan sufficiently preserves the Bureau’s ability to fulfill its statutory mission, while the en banc D.C. Circuit awaits the district court’s determination before addressing the larger constitutional and administrative law issues presented by the case.

In light of Judge Jackson’s prior rulings in the case, it might be wise for the CFPB to attempt to settle the case with the plaintiffs before Judge Jackson acts.

Richard J. Andreano, Jr., John L. Culhane, Jr. & Alan S. Kaplinsky

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District Court Moves Quickly on Limited Remand in NTEU v. Vought; Judge Jackson Seeks Expedited Schedule

Only days after the en banc U.S. Court of Appeals for the District of Columbia Circuit issued a limited remand in National Treasury Employees Union v. Vought, U.S. District Judge Amy Berman Jackson has moved promptly to begin proceedings concerning whether the preliminary injunction currently governing the Consumer Financial Protection Bureau (CFPB) should be modified, suspended, or dissolved.

As previously reported, on June 19, 2026, the en banc D.C. Circuit denied the CFPB’s request to immediately modify the stay pending appeal but granted the Bureau’s alternative request for a limited remand. The court directed Judge Jackson to determine in the first instance whether intervening developments, principally the CFPB’s revised Workforce Restructuring Plan (WRP) and other developments identified by the government, warrant modification, suspension, or dissolution of the preliminary injunction currently in place.

In a scheduling order issued on June 22, Judge Jackson promptly began the process of considering the issues presented by the limited remand. The order directs the parties to identify all dates on which they are available for further proceedings.

Significantly, Judge Jackson instructed the parties that they “must identify ALL of the dates that work for their side,” emphasizing that they were “not being invited to agree to any one date since the state of the Court’s calendar is in constant flux.” The court also advised the parties that it is scheduled to begin a complex four-defendant first-degree murder trial on July 6 and that other matters may affect the court’s availability in August and early September.

While the June 22 order is procedural in nature and does not address the merits of the government’s request, it confirms several important points.

First, consistent with the D.C. Circuit’s observations when it denied the government’s request for a 45-day deadline, Judge Jackson appears poised to proceed expeditiously. Indeed, the en banc court expressly declined to impose a deadline because it expected the district court to continue handling the litigation promptly, as it has throughout the case.

Second, the order underscores that the district court, not the court of appeals, will initially decide whether changed circumstances justify revisiting the preliminary injunction. The principal issue likely to be before the court is whether the CFPB’s revised WRP sufficiently addresses the concerns that led Judge Jackson to issue the injunction in the first place.

That injunction currently bars the CFPB from implementing mass terminations or reductions in force that would prevent the Bureau from carrying out its congressionally mandated functions. It also generally prohibits the agency from terminating employees except for cause related to individual performance or misconduct and bars the destruction of CFPB records. The injunction was designed to preserve the status quo and prevent the agency from being effectively dismantled while the litigation proceeds.

The CFPB, in turn, contends that its revised WRP, which reportedly would reduce staffing from approximately 1,174 employees to approximately 556 employees, would permit the Bureau to continue performing its statutory duties while operating with a substantially smaller workforce. The government has argued that this revised plan, along with other intervening developments, warrants modification or dissolution of the injunction. A potentially significant factor that may influence the district court is that the One Big Beautiful Bill reduced the funds that the CFPB may request from the Federal Reserve Board from 12% of the Fed’s 2009 operating expenses, adjusted for inflation, to 6.5% of such expenses. According to a letter submitted by the CFPB to Congress regarding its funding at the end of last year, this reduced the amount it could request at the time from $785 million to $466.80 million. The letter also advises that to comply with the existing district court injunction, the Bureau would need $677.5 million, in Fiscal Year 2026, which began on October 1, 2025.

Judge Jackson’s forthcoming scheduling order should provide additional insight into the timing and scope of the proceedings on remand. Given the D.C. Circuit’s retention of jurisdiction over the appeal, however, whatever decision the district court reaches is almost certain to be followed by further proceedings before the en banc court.

Accordingly, while the June 22 order addresses only scheduling, it marks the beginning of what could be the next critical phase of the litigation over the future structure and staffing of the CFPB.

Richard J. Andreano, Jr., John L. Culhane, Jr. & Alan S. Kaplinsky

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HUD Modifies FHA Mortgage Loan Policies to Reduce Regulatory Burdens and Promote Affordability

In a series of five Mortgagee Letters, the U.S. Department of Housing and Urban Development (HUD) recently modified policies for Federal Housing Administration (FHA) insured residential mortgage loans to reduce regulatory burdens and promote affordability. A HUD summary of the modifications indicates that the modifications are in accordance with Executive Order 14393, Promoting Access to Mortgage Credit. (To view the summary, click on “June” under 2026 and scroll to June 23, 2026.) The modifications will be incorporated into HUD Handbook 4000.1

The Mortgagee Letters are:

Mortgagee Letter 2026-06 entitled Increase in the Maximum Number of Draw Requests for Limited 203(k) Rehabilitation Mortgage Insurance Program.

Mortgagee Letter 2026-07 entitled Rescission of the Important Notice to Homebuyers Form HUD-92900-B Requirement.

Mortgagee Letter 2026-08 entitled Updates to Loss Mitigation Requirements.

Mortgagee Letter 2026-09 entitled Eliminating Requirements for FHA Mortgagee Approval and Quality Control.

Mortgagee Letter 2026-10 entitled Updates to FHA Quality Control Requirements for Appraisal Field Reviews.

The provisions of Mortgagee Letter 2026-08 may be implemented immediately and must be implemented no later than September 21, 2026. The provisions of the other Mortgagee Letters are effective immediately.

Mortgagee Letter 2026-06

In July 2024 HUD finalized enhancements to the FHA 203(k) rehabilitation mortgage loan program. Among the enhancements, HUD increased the maximum total rehabilitation costs under the Limited Program from $35,000 to $75,000 and increased the allowable rehabilitation period under the Program from six to nine months. The Limited Program provides funds for minor remodeling and non-structural repairs, such as energy-efficient improvements.

The recent Mortgagee Letter explains that “[w]ith no changes to the draw structure or maximum number of allowable draws accompanying these changes, FHA’s Mutual Mortgage Insurance Fund (MMIF) was put at risk through larger disbursements of funds for work yet to be completed.” The Mortgagee Letter provides for smaller disbursements by increasing the maximum amount of draws per contractor from two to four. These consist of the initial draw at closing, no more than two intermediate draws during the rehabilitation process, and the final draw. While the total number of draw requests remains at five, four intermediate and one final, the Mortgagee Letter provides that there may be two disbursements per draw request.

Mortgagee Letter 2026-07

The Mortgagee Letter rescinds the requirement for lenders to provide borrowers with form HUD-92900-B, Important Notice to Homebuyers at application, and to obtain and retain an executed copy of the form. The form included information for homebuyers, including information about interest rates and points, the need for the borrower to provide accurate information and not commit loan fraud, and information about property inspections, recommending that the borrower have an inspection of the property performed.

HUD had previously waived the requirement to provide the form because it contained information about insurance premiums and discounts that were no longer in effect and because it duplicated disclosures required under federal laws, such as the Truth in Lending Act. The Mortgagee Letter permanently removes the requirement.

Mortgagee Letter 2026-08

The Mortgagee Letter adds the failure of a borrower to accept a Trial Payment Plan (TPP) Agreement for a third time as a TPP failure. When a borrower fails a TPP, the lender must apply all funds remaining in suspense to the borrower’s account in accordance with FHA guidelines. Additionally, when a borrower fails a TPP, HUD provides an automatic 90-day extension for the lender to approve another loss mitigation option or to commence or recommence foreclosure.

The Mortgagee Letter also removes the restriction on a borrower making a payment on a TPP more than 15 days before the month in which the payment is due. HUD explains that the modification ensures that proactive borrowers are not penalized, and that the action aligns with the housing policy waiver issued on March 3, 2026.

The Mortgagee Letter modifies the following Handbook provision that sets forth one of the situations in which a lender may initiate foreclosure: “[T]he Mortgagee has completed its review of the Borrower’s loss mitigation request, determined that the Borrower does not qualify for a Loss Mitigation Option, properly notified the Borrower of this decision, and rejected any available appeal by the Borrower.”

The modified provision is as follows:

“[T]he Mortgagee has completed its review of the Borrower’s initial complete loss mitigation request and, if applicable, of any subsequent complete loss mitigation request after a change in the Borrower’s circumstances that impacts their eligibility for a Loss Mitigation Option, and:

  • determined the Borrower does not qualify for a Loss Mitigation Option;
  • properly notified the Borrower of this decision; and
  • rejected any available appeal by the Borrower.”

HUD explains that the modification “[l]imits borrower requests for re-review for loss mitigation prior to foreclosure initiation to instances where a change in the borrower’s circumstances impacts their eligibility for a loss mitigation option.”

Finally, the Mortgagee Letter modifies the TPP requirements to clarify that the monthly payment during the TPP stage and the Permanent Home Retention Option or Outside of the Waterfall Loss Modification Option stage may change based on an increase in escrow payments for taxes and insurance.

Mortgagee Letter 2026-09

Previously for FHA purposes a lender was required to designate an officer in charge who was a full-time corporate officer who worked exclusively for the lender, except that for investing mortgagees without servicing authority the officer in charge was not required to work exclusively for the lender. The officer is charge is the corporate officer designated by a lender to manage and direct a lender’s FHA operations, and to be a corporate officer an individual must serve in one of various specified positions. The Mortgagee Letter removes the requirement that a lender’s officer in charge be full-time and work exclusively for the lender. HUD explained that because all officers in charge are subject to the same conditions, the full-time, exclusive employment requirement is unnecessary.

The Mortgagee Letter removes the requirements under FHA quality control provisions that lenders review their loan performance data for patterns of noncompliance, and document the methodology used for such review, the results of the review and any corrective actions taken as a result of the review. HUD explained that (1) other FHA policy requires lenders to expand the scope of loan-level quality control reviews when fraud or patterns of deficiencies are identified, (2) instead of focusing on loan performance, focusing on loan quality is the most direct way to uncover control weaknesses, and (3) the expectation that lenders review loan performance data is addressed indirectly by FHA credit watch termination provisions.

The Mortgagee Letter creates a permanent exception to the requirement that lenders review all loans that experience an early payment default, regardless of whether the lender is the servicer of the loan, for situations in which the home securing the loan is located in a Presidentially declared major disaster area. The exception applies only if the loan was closed before the start of the incident period for the disaster established by the Federal Emergency Management Agency and the default occurred after the start of the period. HUD notes that previously FHA repeatedly issued waivers to the review requirement for loans impacted by such disasters, that increased early payment defaults following a major disaster are expected, and that many defaults in disaster areas are likely the result of loss of employment/income, property damage, forced relocation, and other factors unrelated to noncompliance with FHA requirements.

The Mortgagee Letter removes the requirement that a lender provide loan administration and quality control staff with access to FHA guidance, either on the internet or in hard copy form. HUD explained that internet access is essentially universal for the mortgage industry, with all current FHA guidance being available online, and that lenders are responsible for compliance with applicable guidance whether their staff are actively referencing such guidance or not.

Mortgagee Letter 2026-10

The Mortgagee Letter removes the requirement that lenders obtain appraisal field reviews on at least 10% of the FHA loans selected for origination and underwriting quality control review, making them an optional component of appraisal quality control. A lender now may obtain appraisal field reviews if needed to adequately assess the appraisal report for compliance with all applicable requirements. HUD explains that “FHA’s previous appraisal field review requirement resulted in significant costs for Mortgagees, which often outweighed the limited risk mitigation benefits considering the frequent use of third-party tools and appraisal desk reviews. By making field reviews optional, FHA is removing a potential barrier to Mortgagee participation in FHA programs, as well as an expense that may be passed indirectly to consumers.”

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

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Banking Groups Support Johnson Nomination

Banking trade groups uniformly support the nomination of former CFPB executive Brian Johnson to head the bureau.

“Brian has a distinguished track record in bank regulatory policy both at the Bureau and on Capitol Hill, and he will bring a thoughtful approach to setting the Bureau’s priorities in the years ahead if confirmed,” said Rob Nichols, President/CEO of the American Bankers Association. “The Bureau upholds its consumer protection mission best when it operates within its statutory authority, promotes responsible innovation and pursues regulations that are appropriately tailored and applied evenly to all market participants.”

Johnson previously served in senior leadership positions at the Bureau from December 2017 until March 2020, during the first Trump Administration. His tenure included serving as Acting Deputy and then Deputy Director for a majority of that period. He has also served in a key policy and legal role on Capitol Hill as Chief Financial Institutions Counsel of the House Financial Services Committee for more than five years. After leaving the CFPB, he was a partner at a major law firm for more than 2 years before becoming Managing Director of Patomak Global Partners (a strategy, risk management, and compliance financial services consulting firm) for about 2 years. He then joined Capital One in November 2024 as Vice President, U.S. Card Compliance Officer.

Consumer Bankers Association (CBA) President /CEO Lindsey Johnson also praised Johnson’s nomination.

“America’s leading Main Street banks look forward to engaging with Director-designate Johnson on policies that provide certainty and create a more durable, stable CFPB where the Bureau meets its mission of consumer protection in a manner consistent with its congressional mandate,” Johnson said. “A transparent, accountable CFPB focused on its core mission will strengthen outcomes for consumers, financial institutions, and the U.S. economy.”

Mortgage Bankers Association President/CEO Bob Broeksmit cited Johnson’s experience in applauding the choice. “MBA welcomes the nomination of Brian Johnson to serve as Director of the CFPB,” he said. “Johnson brings deep experience and knowledge in consumer financial services policy and law, including service as CFPB Deputy Director and in senior policy roles at the Bureau, where he helped oversee rulemaking, supervision, and enforcement activities.”

The CFPB plays a vital role in the mortgage process, Broeksmit said.

“The CFPB is an important partner to our industry, and we will continue to work together to advance reforms that lower costs, reduce unnecessary regulatory burdens, and improve access to sustainable homeownership opportunities.”

The President/CEO of America’s Credit Unions also said he is pleased by the choice.

“Johnson has significant experience in financial policy, and a strong understanding of the importance of right-sized regulations,” said Scott Simpson. “We look forward to the opportunity to work with Johnson in this capacity to advance reforms at the bureau, should he be confirmed.”

However, Senate Banking, Housing and Urban Affairs ranking Democrat Sen. Elizabeth Warren, D-Mass. blasted the nomination of the former Trump Administration official.

“Starting in August, Russ Vought can no longer legally serve as Donald Trump’s hatchet man at the CFPB,” Warren said, based on the federal law that prevents Vought from continuing to serve as Acting Director at the bureau. She continued, “[s]o here comes the next hatchet man to try to finish the job and gut an agency that has returned more than $21 billion to cheated consumers. Trump promised to lower costs on ‘day one.’ Instead he is doing everything in his power to reward the big banks and giant corporations that scam Americans out of their hard-earned money.”

Consumer Financial Services Group

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CFPB Adopts New Enforcement Principles

The CFPB has adopted new Enforcement Principles designed to roll back standards used by the Biden Administration.

The bureau recently applied the new principles in attempting to ensure that customers affected by Bilt’s transition of its credit card services to a new bank partner were not harmed by the change. The CFPB stated that “[h]ere, instead of initiating a protracted investigation, followed by a public enforcement action, which could be litigated for years before consumers get any redress, as the Biden CFPB would have done under the former Director Chopra, this leadership engaged with Bilt directly and collaboratively. This meant that within weeks of the meeting [between the CFPB and Bilt], additional consumers were already receiving redress.”

The CFPB also stated that “[f]ollowing our discussions and at our direction that Bilt ensures full redress, Bilt notified the CFPB that they proactively reached out to the limited number of potentially-affected customers and offered to reimburse them for any overdraft fees, late fees, or insufficient funds fees related to the transition.”

Protect Borrowers had previously sent a letter to the bureau urging it to “immediately engage in risk-based supervision of all covered parties … and, where appropriate, to take any public enforcement actions necessary to uphold the law and protect borrowers.” But the CFPB followed its new enforcement policy instead.

The new Enforcement Principles have four main components: addressing actual harm to consumers, due process, collaboration and efficiency and are as follows:

  • Addressing Actual Harm to Consumers: CFPB focuses its enforcement on addressing actual harm to consumers. When an institution violates the law and causes real and meaningful harm to consumers, the CFPB uses its enforcement authority to ensure that violations are remedied and consumers are made whole. CFPB will not take action in cases in which it believes consumers simply made unwise decisions, or cases involving theoretical or highly speculative harm.
  • Due Process: All Americans are entitled to know what the rules are before they are enforced against them, and the CFPB will ensure its enforcement actions comport with this basic tenet of due process. CFPB enforcement actions are rooted in a clear grant of statutory authority or a regulation promulgated through notice and comment. The CFPB does not seek to stretch the bounds of its statutory authority through novel interpretations or advance a policy agenda through its enforcement actions.
  • Collaboration: The CFPB is charged with taking appropriate enforcement action to address violations of Federal consumer financial law, including filing public enforcement actions when appropriate. But not all situations require an adversarial process and the pursuit of an enforcement action. The CFPB seeks to collaborate with institutions to remedy legal violations voluntarily and make consumers whole for any harm they have suffered. Institutions who self-report violations will not be unnecessarily punished for their candor and willingness to proactively address problems. This approach maximizes the benefit to consumers, and ensures any harm can be addressed quickly, instead of waiting years for the resolution of litigation. In any event, the CFPB will take no more time than necessary to arrive at a fair resolution that accounts for the interests of consumers, institutions, and the CFPB.
  • Efficiency: CFPB is committed to maximizing its resources and operating efficiently. In addition to pursuing a more collaborative approach to addressing issues, the CFPB also refrains from engaging in duplicative enforcement work. CFPB does not pursue an enforcement action where the states or other regulators are better suited to do so,” according to the new principles. CFPB does not undertake such actions, or engage in joint actions, to run up its number of enforcement actions or in pursuit of good press coverage.
Richard J. Andreano, Jr. & John L. Culhane, Jr.

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CFPB Announces Major Overhaul of Consumer Complaint System: A Shift Toward Integrity, Standardization, and Statutory Compliance

Apparently building off the comments it received about complaint intake as well as its prior revisions to the complaint portal, on June 24, 2026, the Consumer Financial Protection Bureau (CFPB) issued a press release announcing a series of significant reforms to its consumer complaint system, particularly with respect to credit reporting complaints. The Bureau characterized these changes as necessary to “restore integrity and utility” to a complaint process that it contends has been increasingly undermined by abuse, inconsistent practices, and unprecedented complaint volume.

The announcement marks one of the most significant revisions to the CFPB’s complaint process since the Bureau began accepting complaints in 2011 and reflects the current leadership’s broader effort to reassess the Bureau’s operations and ensure that its activities align closely with statutory mandates.

A Dramatic Increase in Credit Reporting Complaints

The CFPB noted that credit reporting complaints have increased at an extraordinary rate. According to the Bureau, complaints relating to credit or consumer reporting rose from approximately 150,000 in 2019 to more than five million in 2025—an increase of more than 3,700%.

The Bureau attributes this explosive growth to several factors, including:

  • The increasing use of the CFPB complaint portal by credit repair organizations and credit clinics
  • Social media influencers encouraging consumers to file complaints
  • The emergence of AI-driven tools acting as consumers’ agents in submitting complaints
  • Businesses seeking to improve consumers’ credit scores by disputing accurate negative information.

At the same time, the nationwide consumer reporting agencies (Equifax, Experian, and TransUnion) reportedly have provided increasing amounts of non-monetary relief, closing more than 2.1 million complaints with such relief in 2025, up from 1.3 million in 2024.

According to the Bureau, however, the sheer volume of complaints has created challenges for both the CFPB and companies responding to complaints and has diminished the usefulness of complaint data as an indicator of actual consumer experiences and market conditions.

Key Changes Announced by the CFPB

Standardizing Company Responses

The CFPB found that consumer reporting agencies and other companies have interpreted complaint closure categories inconsistently, particularly the category “Closed with non-monetary relief.”

To address this issue, the Bureau has issued a revised Company Portal Manual providing detailed guidance regarding the proper use of substantive and administrative response categories. The CFPB hopes that standardized reporting practices will improve the reliability and comparability of complaint data.

Strengthening Identity Verification

The Bureau also announced enhanced security measures designed to ensure that complaints are submitted by authorized individuals.

Among the changes:

  • Implementation of two-factor authentication for online accounts
  • Verification of both email addresses and mobile phone numbers
  • Additional disclosures requiring third parties to identify their involvement in the complaint process
  • Planned implementation of address validation at the complaint submission stage.

The CFPB also intends to develop educational materials for authorized representatives, such as adult children assisting elderly parents and spouses of service members.

Reinforcing the Fair Credit Reporting Act Framework

Perhaps the most consequential policy change involves the Bureau’s effort to ensure that consumers first pursue disputes directly with consumer reporting agencies, as contemplated by the Fair Credit Reporting Act (FCRA), before turning to the CFPB complaint portal.

The Bureau expressed concern that some consumers and credit repair organizations have been using the CFPB complaint process as a substitute for the FCRA’s dispute procedures.

As a result, the CFPB has added notices to the complaint portal emphasizing that consumers must first exhaust their dispute rights with consumer reporting agencies. The Bureau is also considering creating a new administrative response category that would permit consumer reporting agencies to return complaints when consumers have not first pursued the required FCRA dispute process.

If implemented, this change could significantly alter how consumers, consumer advocates, and credit repair organizations utilize the CFPB complaint system.

Increased Focus on Potential Abuse

The Bureau indicated that it is exploring additional administrative response categories for situations involving apparent abuse of the complaint process.

Although the CFPB did not specify how it will identify abusive conduct, the Bureau stated that it is developing mechanisms to monitor and safeguard the system from misuse. These developments may raise important questions regarding how the Bureau distinguishes between legitimate high-volume advocacy efforts and abusive practices.

Consumer Education Initiatives

The CFPB also announced plans to expand consumer education efforts regarding:

  • How to dispute errors on credit reports;
  • The risks and costs associated with credit repair services; and
  • How consumers can identify scams and fraudulent credit repair schemes.

Given the increasing prevalence of social media financial advice and AI-based credit improvement tools, the Bureau appears intent on steering consumers toward direct engagement with consumer reporting agencies rather than third-party intermediaries.

Technology Modernization

The CFPB stated that it is investing in technology improvements designed to streamline complaint processing, including:

  • Development of application programming interfaces (APIs) to facilitate more efficient exchanges of complaint information with companies; and
  • Use of address validation tools to improve data quality and reduce unnecessary processing delays.

Redefining the “Backlog”

Finally, the CFPB announced a new operational definition for complaint backlogs.

Historically, complaints awaiting any action were often collectively described as part of the Bureau’s backlog. Going forward, only complaints awaiting action for more than 30 calendar days after submission will be considered part of the backlog. Complaints pending for fewer than 30 days will be categorized as routine work in progress.

This definitional change could materially affect future public discussions regarding complaint processing delays and Bureau workload.

Consumer Advocates Push Back

Not surprisingly, the CFPB’s initiative has already drawn criticism from consumer advocates, particularly the National Consumer Law Center (NCLC), which argues that many of the changes could discourage legitimate consumer complaints and make it more difficult for consumers to obtain assistance from the Bureau.

NCLC has contended that the CFPB is adding unnecessary “friction” to the complaint process at a time when consumer complaints about credit reporting are at historically high levels. According to NCLC, the Bureau’s new requirements, including enhanced attestations, additional identity verification measures, and warnings directing consumers to first dispute matters directly with consumer reporting agencies—may deter consumers with legitimate grievances from seeking help from the CFPB. NCLC has expressed concern that some consumers could abandon complaints altogether rather than navigate additional procedural requirements.

NCLC also disputes the Bureau’s suggestion that rising complaint volumes primarily reflect abuse by credit repair organizations, social media influencers, or AI-driven tools. Instead, NCLC maintains that the large number of complaints demonstrates the persistence of serious problems in the credit reporting system and reflects widespread inaccuracies and consumer frustration with existing dispute processes. The organization has argued that, rather than imposing additional barriers to filing complaints, the CFPB should focus on ensuring that consumer reporting agencies adequately investigate and resolve disputes.

The debate highlights a fundamental policy disagreement regarding the proper role of the CFPB complaint portal. The Bureau’s current leadership views additional safeguards as necessary to preserve the integrity and usefulness of complaint data, while consumer advocates fear that the changes may suppress legitimate complaints and diminish one of consumers’ most effective avenues for obtaining relief and alerting regulators to systemic problems.

Observations

The CFPB’s announcement reflects a significant philosophical shift in how the Bureau views the consumer complaint system.

Under prior leadership, the complaint database was frequently cited as an important market-monitoring and supervisory tool. The current leadership has expressed concern that complaint data may no longer reliably reflect actual consumer experiences because of the increasing involvement of third parties, automated tools, and high-volume dispute strategies.

By emphasizing identity verification, standardization, exhaustion of statutory dispute procedures, and safeguards against abuse, the Bureau appears intent on transforming the complaint portal from a broad consumer advocacy mechanism into a more targeted process focused on disputes that fall squarely within the statutory framework.

These reforms are likely to be welcomed by consumer reporting agencies and other companies that have long argued that the complaint system is vulnerable to misuse and that complaint data can be misleading. At the same time, consumer advocates and credit repair organizations may contend that additional procedural hurdles could make it more difficult for consumers to obtain assistance from the CFPB.

As these changes are implemented, industry participants should closely monitor revised portal procedures, updated guidance, and any future modifications to complaint response obligations.

Alan S. Kaplinsky & John L. Culhane, Jr.

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CFPB Policy Update: Key Takeaways From A Discussion with Senior Advisor and Counsel to the Director, Elie Greenbaum

On June 25, 2026, DC-based Women in Housing & Finance hosted Senior Advisor and Counsel to the Director of the Consumer Financial Protection Bureau, Elie Greenbaum, for a wide-ranging discussion on the Bureau’s current policy priorities and regulatory outlook. Following are notable updates on the CFPB’s agenda for industry participants. This report is based on the input of several members of our Consumer Financial Services Group who attended the meeting.

Affordable Mortgage Credit

The CFPB is actively working to implement Executive Order (E.O.) 14393 “Promoting Access to Mortgage Credit.” As we discussed in a previous blog, this EO seeks to reduce the compliance cost of mortgage origination and servicing by easing various regulatory requirements and enforcement policies, while also addressing the capital and liquidity frameworks applicable to community banks and smaller banks. The E.O. requires the CFPB to: review its Ability-to-Repay (ATR) / Qualified Mortgage (QM) rule; modernize its Home Mortgage Disclosure Act (HMDA) rule; consider revising related supervisory guidance; modernize its appraisal regulations; consider aligning supervisory expectations with other federal regulators; consider promulgating a policy against certain enforcement actions; and consider eliminating duplicative or unnecessary requirements regarding licensing or registration for mortgage loan officers. E.O. 14393 further requires “streamlining the requirements applicable to rate-and-term refinancing under Regulation X mortgage servicing rules.”

Greenbaum remarked that a new mortgage servicing rule is a top priority for the CFPB, with a clearer timeline for this item compared to other initiatives in its pipeline. Consistent with this positioning, the Bureau will be seeking stakeholder input through a forthcoming Request for Information Regarding Promoting Access to Mortgage Credit, which was submitted to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) for review on June 22, 2026 and should be published in the Federal Register soon. While loan originator (LO) compensation was not specifically addressed in E.O. 14393, Greenbaum noted that LO compensation is not being ignored in the current review of mortgage rules and welcomed stakeholder input on the topic. We are aware of an effort to provide input on the rule to the CFPB.

Open Banking and Section 1033 Rule Revisions

Greenbaum noted that the CFPB is actively working on revisions to its Section 1033 rulemaking, which governs consumers’ rights to access and share their financial data. The Bureau emphasized its desire to create durable regulations built on broad consensus, recognizing that many vocal constituencies have an interest in the outcome of the rule. Recent press reports indicate that a proposed rule is likely to be published in July 2026, before Acting Director Vought’s term expires on August 1, 2026. See our discussion of federal and state developments with regard to Section 1033 here.

Enforcement Approach

Greenbaum described the CFPB’s enforcement agenda as “robust,” with current priorities focused on actions that are measurable and have a direct impact on consumers. He stressed the importance of the agency’s cooperation with state regulators, noted that the CFPB intends to minimize unnecessary costs for the industry from duplicative investigations, and reiterated the preference for clear rulemaking over “regulation by enforcement.” We recently blogged about the CFPB’s new enforcement principles.

ECOA and Regulation B

Greenbaum discussed the CFPB’s recent rulemaking intended to bring Regulation B in line with the text of the Equal Credit Opportunity Act’s (ECOA) prohibitions against discrimination, which we previously discussed here. The revisions are intended to decrease risks from debanking, increase participation in the credit market, and protect free speech. Greenbaum further acknowledged ongoing court challenges to guidance related to Special Purpose Credit Programs (SPCPs).

While unable to provide definitive clarification, Greenbaum confirmed that CFPB guidance regarding these programs has been updated to be consistent with Regulation B and we know that a prior guidance statement regarding these programs has been rescinded. We previously blogged about current challenges to the rulemaking, including the provisions about SPCPs, here.

Immigration Status and Ability-to-Pay Determinations

Following the recently issued E.O. 14406, “Restoring Integrity to America’s Financial System,” the CFPB published a statement in the Federal Register reminding industry participants of credit card and mortgage loan ability-to-pay requirements under the Truth in Lending Act and Regulation Z related to borrowers’ immigration status. The statement noted that “a creditor’s awareness of a consumer’s immigration status may implicate a creditor’s reasonable expectations about whether a consumer’s income from U.S.-based employment will remain available for repayment.” Greenbaum noted that the Bureau’s supervisory expectation is that lenders follow federal regulations, and lenders who receive documents suggesting questionable immigration status should be mindful of their ability to repay obligations. Unfortunately, as we previously noted, the CFPB statement raises compliance concerns without providing guidance on how to address the concerns. As a result, it is contrary to the goals of the EO. In July we will release a podcast on the guidance featuring Consumer Financial Services and Immigration lawyers.

Artificial Intelligence

Greenbaum expressed optimism about the use of artificial intelligence by industry participants and the CFPB itself to increase efficiencies. He noted that the Bureau is further considering how to supervise financial institutions’ use of AI tools and confirmed that consumer protection concerns related to AI are not being ignored. While responsible use of AI should be subject to regulation, Greenbaum was skeptical that AI might exacerbate discrimination risks.

Digital Assets

Regarding digital assets, Greenbaum noted that the CFPB is looking at how the Electronic Fund Transfer Act (EFTA) may apply to certain types of transactions, and identifying other consumer protection concerns in this evolving space. He indicated that clarity would best be provided through formal rulemaking, though guidance may be appropriate in some situations.

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We will continue to monitor these developments and provide updates as the CFPB advances its rulemaking and enforcement agenda. For questions about how these policy changes may affect your business, please contact our team.

Adam Maarec, Kaley Schafer, Aja D. Finger, John L. Culhane, Jr., Richard J. Andreano, Jr. & Alan S. Kaplinsky

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CFPB Rescinds Special Purpose Credit Programs Advisory Opinion

The CFPB has rescinded a December 2020 advisory opinion that addressed Special Purpose Credit Programs (SPCP) offered by for-profit entities that use the common characteristics of race, color, national origin, or sex, or any combination thereof, as eligibility criteria. The advisory opinion had addressed the content of the written plan that would have been required for the SPCP and the data that could have been used to support a determination that the SPCP was necessary because people sharing those characteristics probably would not have received credit or would have received it on less favorable terms than those ordinarily available to other applicants. The CFPB stated it “has determined that the advisory opinion should be rescinded, as it is now outdated and inconsistent with the recent amendments to Regulation B” under the Equal Credit Opportunity Act.

Among other changes, the April 2026 amendments prohibit the use of the race, color, national origin, or sex, or any combination thereof, of the applicant as a common characteristic or factor in determining eligibility for a SPCP offered by a for-profit entity. While the amendments allow the use of religion, marital status, age or the receipt of public assistance income, or any combination thereof, in a SPCP offered by a for-profit entity, they add more stringent requirements, including a requirement that the for-profit entity document why the use of those characteristics is necessary and a requirement that it show that absent the SPCP persons sharing those characteristics would not have received credit at all. No changes were made regarding SPCPs offered by governmental or non-profit entities.

The bureau made the change on the basis that there was no evidence “that SPCPs based on race, color, national origin, or sex remain necessary to serve the narrow original purpose of ECOA’s SPCP provisions.” As a result, “the Bureau determined that it is no longer appropriate, necessary, or proper for the SPCP standards in Regulation B to permit such programs to use the common characteristics of race, color, national origin, or sex as eligibility criteria.” The amendments are being challenged in a lawsuit.

The CFPB noted that “the recent amendments to the SPCP provisions of Regulation B added new requirements to the written plan requirement that for-profit organizations offering or participating in an SPCP must satisfy. The advisory opinion, of course, does not address these new requirements. Thus, the advisory opinion is no longer current.”

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

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Senate Democrats Demand Answers From Acting Director Vought Regarding CFPB Website Purge

Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, joined by Senators Raphael Warnock (D-GA), Andy Kim (D-NJ), and Lisa Blunt Rochester (D-DE), recently sent a detailed letter to CFPB Acting Director Russell Vought seeking explanations for the agency’s removal of thousands of webpages and other materials from the CFPB’s website.

As previously reported, the CFPB in May removed from its website virtually all newsroom materials, blog posts, speeches, testimony, press releases, consumer advisories, and other content published before February 2025. The agency subsequently also removed all of its Supervisory Highlights reports, a series of publications issued periodically since 2012 summarizing supervisory findings and trends observed by the Bureau during examinations of supervised entities.

In their letter, the Senators contend that the removal of these materials has deprived consumers, regulators, researchers, and industry participants of important information concerning consumer financial protection issues and the CFPB’s historical activities. The lawmakers argue that the deleted materials served as a valuable repository of information regarding enforcement actions, supervisory priorities, consumer education, and research conducted during the Bureau’s first fifteen years.

The Senators expressed particular concern regarding the removal of:

  • Consumer advisories addressing topics such as medical debt collection practices and potentially predatory lending practices;
  • Information regarding consumer restitution and redress resulting from CFPB enforcement actions;
  • Blog posts addressing regulatory issues, including bank merger review;
  • Resources designed to assist vulnerable populations, including materials concerning identity theft involving children; and
  • All Supervisory Highlights reports issued since the CFPB’s inception.

The letter also notes that the CFPB removed website translation functionality that previously allowed users to access information in multiple languages, including Spanish, Chinese, Vietnamese, Korean, Tagalog, Russian, Arabic, and Haitian Creole, apparently in response to Executive Order 14224, titled Designating English as the Official Language of the United States. According to the Senators, eliminating these translations may make it more difficult for non-English-speaking consumers to access information about consumer financial products and services and to submit complaints to the Bureau.

The Senators further question whether the CFPB’s actions are consistent with federal recordkeeping obligations. Citing the Federal Records Act and prior litigation concerning preservation of CFPB records, they request detailed information concerning what records were removed, whether duplicate copies continue to exist, and where any original records are being maintained.

Among other things, the lawmakers asked Acting Director Vought to:

  • Identify all records removed from the CFPB website and explain where those records are preserved;
  • Explain the rationale for removing blog posts, newsroom materials, and Supervisory Highlights reports;
  • Identify the individuals responsible for deciding what content would be removed;
  • List all consumer advisories and settlement notices that were removed and explain why they were removed;
  • State whether the CFPB intends to continue publishing consumer advisories and Supervisory Highlights reports in the future;
  • Indicate whether additional website content is expected to be removed; and
  • Commit to restoring previously deleted materials or explain why no such commitment will be made.

The Senators requested that Acting Director Vought respond to their questions by July 2, 2026.

The removal of historical CFPB materials has generated significant debate among consumer advocates, industry participants, and former CFPB officials. Critics argue that the removal of these materials reduces transparency and make it more difficult for consumers and regulated entities to understand the Bureau’s historical positions, supervisory concerns, and enforcement priorities. Others have noted that much of the removed material remains accessible through internet archives and may no longer reflect the current policy positions of the Bureau under its present leadership.

Whether the CFPB ultimately restores some or all of the removed materials, and whether it continues publication of resources such as consumer advisories and Supervisory Highlights, will likely be closely watched by both industry and consumer advocates. Assuming the Bureau responds, its response to the Senators’ letter may provide additional insight into the agency’s long-term approach to transparency, public guidance, and preservation of its institutional history.

Below are links to other updates related to the CFPB website materials purge:

Alan S. Kaplinsky & John L. Culhane, Jr.

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Major Housing Legislation Includes Small-Dollar Mortgage Loan Provisions

After much back and forth between the U.S. House of Representatives and Senate over an extended period of time, both chambers have passed major housing legislation entitled “21st Century ROAD to Housing Act.

Although initially a ceremony in which President Trump would sign the Act into law was scheduled for June 24, 2026, the ceremony was canceled with President Trump apparently tying his willingness to sign the legislation to the Senate passing the Save America Act, which includes various provisions regarding federal elections. Although the law in this area has been subject to differing interpretations, it appears that under Clause 2 of Section 7 of Article I of the Constitution, if President Trump does not sign the legislation within 10 days of it being presented to him (excluding Sundays but not federal holidays), and if Congress does not adjourn sine die in the interim, then the bill automatically becomes law. The legislation was presented to the President on June 29, 2026, so it appears that the 10-day period will end on July 9. Should the President veto the legislation, potentially Congress could override the veto because it passed the House by a vote of 358-32 and the Senate by a vote of 85-5, with both totals exceeding the vote necessary to override a Presidential veto.

The Act includes provisions that focus on small-dollar mortgage loans.

FHA Small Dollar Loan Pilot Program

The Act provides that not later than one year after enactment, the U.S. Department of Housing and Urban Development (HUD) “may establish a pilot program to increase access to small-dollar mortgages for mortgagors” in connection with Federal Housing Administration (FHA) insured mortgage loans. For purposes of the pilot program, a “small-dollar mortgage loan” is defined as a mortgage that (1) has an original principal balance of $100,000 or less and (2) is secured by a one- to four-unit property that is the principal residence of the mortgagor.

The pilot program may include:

  • The authorization of direct payments to lenders to incentivize the origination of small-dollar mortgages.
  • The adjustment of terms and costs imposed by FHA with respect to small-dollar mortgages.
  • The provision of direct grants for mortgagors who obtain small-dollar mortgages to cover costs associated with:
  • Down payments.
  • Closing costs.
  • Appraisals.
  • Title insurance.
  • The conducting of outreach to potential mortgagors about the availability of small-dollar mortgages.
  • The provision of technical assistance for lenders that originate small-dollar mortgages.

The pilot program would sunset four years after it is initiated. Further, the authority of HUD and FHA to establish a pilot program to increase access to small-dollar mortgages for mortgagors would expire three years after the enactment of the Act.

Beginning not later than one year after the establishment of the pilot program and ending one year after the sunset of the program, FHA must submit to Congress an annual report that must include specified information to help provide for an analysis of the program.

Loan Originator Compensation

The Act includes provisions focusing on whether changes to the Regulation Z loan originator compensation rule under the Truth in Lending Act (TILA) would be appropriate to incentivize loan originators to originate small-dollar mortgage loans. For purposes of the provisions, a “small-dollar mortgage loan” is defined as a mortgage loan having an original principal obligation of not more than $100,000 that is (1) secured by real property designed for the occupancy of between one and four families, and (2) (a) insured by FHA under Title II of the National Housing Act, (b) made, guaranteed or insured by the Department of Veterans Affairs or the Department of Agriculture, or (c) eligible to be purchased or securitized by Fannie Mae or Freddie Mac.

Not later than 270 days after enactment, the CFPB must submit a report to House and Senate committees on loan originator compensation practices throughout the residential mortgage market, including the relative frequency of loan originators being compensated:

  • With a salary.
  • With a commission reflecting a fixed percentage of the amount of credit extended. (The loan originator compensation rule expressly authorizes the payment of a commission that is a fixed percentage of the loan amount.)
  • With a commission based on a factor other than a fixed percentage of the amount of credit extended.
  • With a combination of salary and commission.
  • On a loan volume basis.
  • With a commission reflecting a percentage of the amount of credit extended, for which a minimum or maximum compensation amount is set. (The loan originator compensation rule expressly authorizes the payment of a commission that is a fixed percentage of the loan amount, subject to an optional fixed minimum and/or maximum dollar compensation amount.)

The report must include (1) data and other analyses regarding the effect of the approaches to loan originator compensation described above on the availability of small-dollar mortgage loans, and (2) an analysis and a discussion regarding potential barriers to small-dollar mortgage lending.

In connection with producing the report, the Act provides that “the Secretary shall, in coordination with relevant Federal agencies that regulate federally backed small-dollar mortgages and in consultation with the Director of the Community Development Financial Institutions Fund established under section 104 of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4703), give due consideration to the practices for compensating loan originators that are employed by or originate loans on behalf of community development financial institutions.” Presumably, the reference to “the Secretary” is intended to be a reference to the CFPB Director.

A prior version of the legislation passed by the Senate provided that after issuing the report, the CFPB could issue regulations to clarify the forms of compensation a lender may use to compensate a loan originator that are permissible under TILA “and would result in the loan originator receiving compensation for originating a small dollar mortgage that is not less than the compensation the loan originator would receive for originating a mortgage loan that is not a small dollar mortgage.” The Act does not provide for such CFPB rulemaking. Of course, the CFPB on its own could engage in rulemaking within the boundaries of TILA.

Ability-to-Repay Rule/Qualified Mortgage Loan Points and Fees Limitations

The Act includes provisions focusing on whether the Regulation Z ability-to-repay rule under TILA may impact the origination of small-dollar mortgage loans. For purposes of the provisions, a “small-dollar mortgage” is a mortgage with an original principal balance of less than $100,000.

The qualified mortgage provisions under the rule, which provide for a safe harbor or rebuttable presumption of compliance with the rule based on the loan pricing, impose a limitation on the points and fees that a lender may charge, with the limitation varying based on the loan amount. Specifically, for 2026 the points and fees limits are as follows:

  • For a loan amount greater than or equal to:
  • $ 137,958, 3% of the total loan amount (the total loan amount is the actual loan amount subject to certain adjustments).
  • $82,775 but less than $ 137,958, $4,139.
  • $27,592 but less than $82,775, 5% of the total loan amount.
  • $17,245 but less than $27,592, $1,380.
  • For a loan amount less than $ 17,245, 8% of the total loan amount.

The Act provides that not later than 270 days after the date of enactment the CFPB, in consultation with HUD and the Federal Housing Finance Agency, must evaluate the impact of the points and fees limitations on small-dollar mortgage originations.

A prior version of the legislation passed by the Senate provided that after the evaluation, the CFPB could initiate rulemaking to amend the points and fees limitations to encourage additional lending for small-dollar mortgages. The Act does not provide for such CFPB rulemaking. Of course, the CFPB on its own could engage in rulemaking within the boundaries of TILA.

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

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Justices Roberts and Gorsuch Cast Doubt on the FTC’s UDAP Rulemaking Authority in Trump v. Slaughter

We have, of course, already blogged about the Supreme Court’s holding in Trump v. Slaughter, 25-332 (2026). One aspect of the decision, however, deserves separate attention because it may foreshadow future challenges to one of the FTC’s, and perhaps the CFPB’s, most significant sources of regulatory authority.

Although not necessary to the Court’s holding, Chief Justice Roberts and, even more pointedly, Justice Gorsuch questioned the extraordinary breadth of the Federal Trade Commission’s authority to define by regulation what constitutes an “unfair or deceptive act or practice” under Section 5 of the Federal Trade Commission Act.

Chief Justice Roberts observed that:

“the FTC has the power to promulgate substantive rules that carry the force of law. In the consumer-protection realm, for instance, the FTC is tasked with giving content to the startlingly abstract idea of ‘acts or practices which are unfair or deceptive.’”

Justice Gorsuch went considerably further. Referring generally to modern administrative agencies, he wrote:

“Often, these agencies do all this with hardly any statutory guidance, based on broad grants of legislative authority. The FTC, for example, enjoys what the Court calls the ‘startling’ power to define, outlaw, and prosecute any ‘acts or practices which are unfair or deceptive.’”

Professor Jeff Sovern of the University of Maryland Francis King Carey School of Law, writing on June 30, 2026 on the Consumer Law & Policy Blog correctly observed that Justice Gorsuch’s formulation appears far more skeptical than the Chief Justice’s. In Professor Sovern’s view, Justice Gorsuch’s language suggests that he questions whether Congress may constitutionally confer such sweeping authority on the FTC in the first place.

Professor Sovern also notes that Congress did provide some guidance regarding unfairness through 15 U.S.C. § 45(n), which limits unfairness findings to practices causing or likely to cause substantial consumer injury that is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or competition.

That statutory limitation, however, may not answer Justice Gorsuch’s broader constitutional concern.

The issue Justice Gorsuch appears to be raising is not simply whether Congress supplied enough standards to guide the FTC’s exercise of its unfairness authority. Rather, it is whether Congress may constitutionally delegate to an executive agency the essentially legislative power to determine what business conduct throughout the American economy is unlawful.

To date, the Supreme Court has generally addressed such concerns through the so-called “major questions doctrine” rather than by reviving the constitutional non-delegation doctrine. Under the major questions doctrine, courts require Congress to speak with unmistakable clarity before concluding that it intended to confer authority over questions of vast economic and political significance. Applying that principle, the Court invalidated the EPA’s Clean Power Plan in West Virginia v. EPA, 597 U.S. 697 (2022), struck down the Secretary of Education’s student loan forgiveness program in Biden v. Nebraska, 600 U.S. 477 (2023), invalidated the CDC’s nationwide eviction moratorium in Alabama Association of Realtors v. Department of Health & Human Services, 594 U.S. 758 (2021) (per curiam), and stayed OSHA’s vaccine-or-test mandate in National Federation of Independent Business v. Department of Labor, OSHA, 595 U.S. 109 (2022) (per curiam). Each of those decisions rested primarily on a statutory interpretation that Congress had not clearly authorized the agency’s asserted exercise of power, rather than on constitutional limits on Congress’s ability to delegate legislative authority.

Justice Gorsuch, however, has long suggested that the Court should go further. His dissent in Gundy v. United States, 588 U.S. 128 (2019), argued for reinvigorating the Constitution’s non-delegation doctrine, under which Congress may not transfer its legislative power to executive agencies absent meaningful limiting principles. His concurrence in Trump v. Slaughter appears to continue that theme.

Justice Gorsuch’s concurrence also fits comfortably within a long line of Supreme Court decisions recognizing constitutional limits on Congress’s ability to delegate legislative power. Although the Court has not invalidated a federal statute on nondelegation grounds since Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), and A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), those decisions remain good law and stand for the proposition that Congress must supply meaningful standards governing an agency’s exercise of delegated authority. More recent decisions (including Mistretta v. United States, 488 U.S. 361 (1989), Touby v. United States, 500 U.S. 160 (1991), and Whitman v. American Trucking Associations, Inc., 531 U.S. 457 (2001)) reaffirmed that the Constitution imposes outer limits on legislative delegations even while upholding the statutes before the Court. Particularly noteworthy is Justice Rehnquist’s concurring opinion in Industrial Union Department, AFL-CIO v. American Petroleum Institute, 448 U.S. 607 (1980) (the “Benzene Case”), which argued that Congress may not simply announce a broad public policy objective while leaving an agency to determine the substance of the law. Justice Gorsuch’s concurrence in Trump v. Slaughter suggests that at least some (and maybe a majority of) members of the current Court may be prepared to give renewed force to those constitutional principles.

If Justice Gorsuch’s views ultimately attract a majority of the Court, agencies could face challenges that are considerably more sweeping than those brought under the major questions doctrine. Rather than asking whether Congress clearly authorized a particular rule, courts would instead ask whether Congress constitutionally could have delegated such broad policymaking authority in the first place.

These observations may have implications extending well beyond the FTC.

Although Trump v. Slaughter involved the FTC rather than the CFPB, it is difficult to read Chief Justice Roberts’ description of the FTC’s authority as the power to give content to the “startlingly abstract” concept of unfair or deceptive practices, or Justice Gorsuch’s criticism of Congress’s conferral of such broad policymaking authority, without wondering whether they harbor similar concerns about the CFPB’s broader authority to define and prohibit “unfair, deceptive, or abusive” acts or practices under the Consumer Financial Protection Act.

Indeed, courts have already shown reluctance to permit the CFPB to rely on its UDAAP authority in expansive ways. In American Bankers Association v. CFPB, No. 2:22-cv-00125 (E.D. Tex. Sept. 8, 2023), the district court held that the CFPB exceeded its statutory authority when it amended its UDAAP Examination Manual to assert that discrimination could itself constitute an unfair act or practice, notwithstanding the existence of separate federal fair lending statutes (such as the Equal Credit Opportunity Act and Fair Housing Act, among others) specifically addressing discrimination.

Likewise, the FTC’s recently invalidated non-compete rule illustrates the judiciary’s growing skepticism toward agency assertions of broad regulatory authority based on highly general statutory language. Although the district court ultimately invalidated the rule on statutory rather than constitutional grounds, the litigation demonstrated the increasing willingness of courts to scrutinize expansive agency claims of regulatory authority.

Whether the Supreme Court is prepared to revive the nondelegation doctrine remains to be seen. But the majority opinion in Trump v. Slaughter (joined in by 6 members of the Court) and Gorsuch’s concurring opinion suggest that at least some members (and perhaps all 6 of the Court’s conservative Justices) of the Court are beginning to look beyond the major questions doctrine and toward the more fundamental constitutional question. The major questions doctrine asks whether Congress clearly authorized a particular agency action. The nondelegation doctrine asks the far more consequential question whether Congress constitutionally may confer such open-ended policymaking authority on an executive agency in the first place.

If the Court eventually revives the constitutional nondelegation doctrine, both the FTC’s UDAP authority and the CFPB’s UDAAP authority could become targets of future constitutional challenges. Whether those challenges ultimately succeed is impossible to predict. But Chief Justice Roberts’ description of the FTC’s authority as “startlingly abstract,” coupled with Justice Gorsuch’s unmistakable skepticism toward broad legislative delegations, suggests that this issue may soon move from academic debate to active constitutional litigation. Consumer financial services providers, their counsel, and regulators alike would be well advised to pay close attention.

Alan S. Kaplinsky, John L. Culhane, Jr. & Richard J. Andreano, Jr.

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New Jersey Attorney General Issues Sweeping Enforcement Statement Targeting “Junk Fees”

The New Jersey Attorney General and Division of Consumer Affairs recently issued a comprehensive Enforcement Statement signaling an aggressive enforcement posture toward so-called “junk fees” under the New Jersey Consumer Fraud Act (CFA). The Enforcement Statement was issued in conjunction with Governor Mikie Sherrill’s Executive Order No. 19, which directs state agencies to review and recommend measures to eliminate or reduce junk fees across a broad range of industries. Although the Enforcement Statement does not create any new legal obligations, it provides important insight into how New Jersey regulators intend to interpret and enforce existing law and serves as a warning to businesses operating in the state.

The Statement arrives amid a broader national movement targeting hidden, surprise, and allegedly excessive fees. Over the past several years, the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), state attorneys general, and state legislatures have all pursued initiatives designed to curb what they characterize as junk fees. While the CFPB’s efforts have stalled under the Trump Administration, the FTC continues to pursue enforcement and implementation of its junk-fee rule, and states increasingly are filling the enforcement vacuum created by the CFPB.

Against that backdrop, New Jersey’s Enforcement Statement is particularly noteworthy because it applies junk-fee theories to a broad range of industries, including consumer financial services, and advances an expansive interpretation of the CFA that goes beyond traditional disclosure issues.

The Growing National Campaign Against Junk Fees

The campaign against junk fees gained significant momentum during the Biden Administration.

At the federal level, the CFPB under former Director Rohit Chopra made junk fees a centerpiece of its regulatory and enforcement agenda. The Bureau targeted overdraft fees, nonsufficient funds fees, credit card late fees, mortgage-related fees, auto finance add-on products, force-placed insurance charges, loan servicing fees, and other ancillary products and services that it believed provided little value to consumers or were inadequately disclosed.

The CFPB’s enforcement actions frequently focused on products that consumers allegedly did not understand they were purchasing, products that duplicated existing benefits, or fees embedded in loan payments without meaningful consumer consent. Many of the concepts discussed in the New Jersey Enforcement Statement (including loan packing, add-on products, manipulation of electronic consent, and fees that provide little or no value) closely mirror theories advanced by the CFPB during the Chopra era.

Since Acting Director Russ Vought assumed leadership of the CFPB, however, the Bureau has sharply curtailed both rulemaking and enforcement activity. The CFPB’s highly publicized campaign against junk fees has receded, leaving states and other regulators to take the lead.

The FTC, by contrast, continues to pursue junk-fee initiatives. In December 2024, the FTC adopted its Rule on Unfair or Deceptive Fees, commonly known as the Junk Fees Rule. The rule, which became effective in May 2025, requires hotels, short-term lodging providers, and live-event ticket sellers to disclose the total price (including mandatory fees) up front. The rule is directed primarily at “drip pricing,” the practice of advertising a low initial price and adding mandatory fees later in the purchasing process.

Although the FTC rule applies only to limited industries, the Commission has made clear that it intends to continue challenging hidden fees and deceptive pricing practices in other industries through enforcement actions under Section 5 of the FTC Act.

States have likewise become increasingly active. California, Minnesota, Connecticut, Colorado, Oregon, Virginia, and Massachusetts have all adopted laws or regulations requiring some form of all-in pricing or enhanced fee disclosure. Illinois recently enacted the Junk Fee Ban Act, which will impose additional pricing-transparency requirements and authorize significant penalties. Many state attorneys general have also launched investigations and enforcement actions involving rental housing fees, ticketing fees, hotel resort fees, cable and internet fees, and consumer finance products. Even New York City has entered the field. In 2024, the New York City Department of Consumer and Worker Protection DCWP adopted rules implementing the city’s “junk fee” law, which generally prohibits businesses from advertising or displaying prices that exclude mandatory fees or surcharges. The rules require businesses to disclose the total price consumers will be required to pay, with limited exceptions for taxes and certain government-imposed charges, and are intended to combat drip pricing and improve price transparency across a broad range of consumer transactions. Violations may expose businesses to civil penalties and enforcement actions by the DCWP.

Against this national backdrop, New Jersey’s Enforcement Statement reflects a broader trend toward heightened scrutiny of fees and pricing practices.

The State’s View of Junk Fees

According to the Attorney General, junk fees include hidden, surprise, or excessively priced charges that provide little or no value to consumers or that are not transparently disclosed. The Statement asserts that such fees contribute to affordability concerns, distort competition, and make it difficult for consumers to compare products and services.

The Attorney General emphasizes that junk fees can arise in virtually any consumer transaction and can appear in industries ranging from housing and automobile sales to lending, travel, and consumer services. Significantly, the Statement suggests that fees need not be entirely undisclosed to attract scrutiny. Fees that are inadequately explained, misleadingly described, or disproportionate to the value provided may also be considered problematic.

The Consumer Fraud Act as the Primary Enforcement Tool

The Statement relies heavily on the broad language of the Consumer Fraud Act, one of the nation’s most expansive consumer protection statutes.

The CFA prohibits:

  • Unconscionable commercial practices;
  • Abusive commercial practices;
  • Deception and misrepresentation;
  • Fraud and false pretenses;
  • Material omissions and concealment of facts; and
  • Violations of other state or federal laws.

Violations can expose businesses to civil penalties of up to $10,000 per violation for a first offense and up to $20,000 per violation for subsequent violations, in addition to other remedies.

The Attorney General emphasizes that the CFA is sufficiently flexible to address evolving forms of consumer harm, including those facilitated by technology and artificial intelligence.

“Drip Pricing” and Hidden Fees

One of the most significant aspects of the Statement is its focus on drip pricing.

The Attorney General describes drip pricing as the practice of advertising a low price and then adding mandatory fees later in the transaction process. According to the Statement, this practice may constitute a deceptive practice because it prevents consumers from accurately comparing products and services and obscures the true cost of a transaction.

This position closely parallels the FTC’s Junk Fees Rule and reflects a growing consensus among regulators that mandatory fees should generally be included in the advertised price.

The Statement specifically highlights rental housing as an area of concern, noting that advertised rents may not reflect mandatory fees that significantly increase the consumer’s actual monthly cost.

“Dark Patterns” and Digital Manipulation

The Statement also focuses heavily on so-called “dark patterns”—website and mobile application designs that allegedly manipulate consumer decision-making or conceal material information.

Examples include:

  • Dense fine print;
  • Buried disclosures;
  • Pop-up screens;
  • Manipulated font sizes;
  • Strategic placement of disclosures;
  • Complex click-through processes; and
  • Website designs that make fees difficult to identify.

These concerns mirror recent FTC enforcement actions and demonstrate regulators’ growing willingness to scrutinize not only the substance of disclosures but also the manner in which disclosures are presented.

Misrepresentations About Fees

The Statement identifies several categories of representations that may be considered deceptive, including representations concerning:

  • The purpose of a fee;
  • Whether a fee is mandatory or optional;
  • Who receives the fee; and
  • The value provided by the fee.

The Attorney General also warns that omissions may be actionable. For example, regulators may challenge circumstances in which a seller highlights a monthly payment amount while failing to disclose optional products or services included within that payment.

This aspect of the Statement has particular relevance for lenders, automobile dealers, fintech companies, and other businesses that offer ancillary products and services in connection with financing transactions.

Unconscionable and Abusive Fees

Perhaps the most significant aspect of the Statement is its discussion of unconscionability.

The Attorney General takes the position that a fee need not be deceptive to violate the CFA. Rather, a fee may be unlawful if it is unconscionable or abusive.

According to the Statement, regulators may consider factors such as:

  • The seller’s cost;
  • The value received by the consumer;
  • The practical utility of the product or service; and
  • The magnitude of any markup.

The Statement cites litigation against a major lender alleging that consumers paid substantial amounts for ancillary products that rarely provided meaningful benefits. It also references studies showing substantial markups on optional products sold in automobile transactions.

By emphasizing the relationship between price and value, the Statement signals a willingness to scrutinize not merely how fees are disclosed but whether regulators believe the fee itself is justified.

That approach goes considerably further than many state all-in pricing laws, which generally focus on disclosure and transparency rather than substantive assessments of value.

Add-On Products and Consumer Financial Services

The Enforcement Statement may be especially important for consumer financial services companies because many of its examples are drawn directly from financial-services enforcement actions.

The Statement discusses:

  • Auto-finance add-on products;
  • Loan-packing allegations;
  • Duplicative insurance products;
  • Optional products embedded in monthly payments;
  • Electronic-signature practices;
  • Consumer-consent procedures; and
  • Products that allegedly provide little or no value.

These examples closely resemble theories advanced by the CFPB (under former Director Rohit Chopra) and state attorneys general in enforcement actions involving auto finance companies, installment lenders, and other providers of consumer financial products.

As a result, the Statement arguably represents one of the clearest examples to date of a state attorney general incorporating the CFPB’s former junk-fee framework into a state UDAP statute.

Electronic Consent and E-SIGN Issues

The Statement also signals increased scrutiny of electronic contracting practices.

The Attorney General identifies several practices that may undermine meaningful consumer consent, including:

  • Pre-checked boxes;
  • Pre-loaded optional products;
  • Rapid scrolling through disclosures;
  • Sales representatives maintaining exclusive control of electronic devices during the contracting process; and
  • Potential violations of the federal E-SIGN Act.

These concerns reflect broader regulatory efforts to ensure that consumers have a genuine opportunity to review and understand contract terms before agreeing to fees or ancillary products.

Arbitration Clauses

An unusual aspect of the Statement is its discussion of arbitration provisions and class-action waivers.

The Attorney General notes that many consumers lack practical means to challenge allegedly improper fees because arbitration agreements frequently require individual dispute resolution and prohibit class actions. The Statement suggests that this reality makes government enforcement particularly important.

Although the Statement does not challenge arbitration agreements directly, the discussion provides additional context for the Attorney General’s stated commitment to active enforcement.

Takeaways

The New Jersey Attorney General’s Enforcement Statement represents one of the most comprehensive state pronouncements to date regarding junk fees.

Unlike many recent state laws that focus primarily on all-in pricing and disclosure requirements, the New Jersey Statement advances a far broader theory of liability. It addresses hidden fees, drip pricing, dark patterns, ancillary products, electronic consent practices, fees that allegedly provide little value, and pricing that regulators may view as excessive or unconscionable.

The Statement also arrives at a time when the CFPB has retreated from its aggressive junk-fee agenda. As a result, state attorneys general increasingly appear poised to become the primary regulators advancing junk-fee theories. New Jersey’s Enforcement Statement may therefore serve as a roadmap for future state enforcement efforts, particularly in the consumer financial services industry.

Banks, nonbank lenders, fintech companies, auto finance companies, mortgage lenders, servicers, and other consumer financial services providers should carefully review their fee structures, disclosures, ancillary product offerings, electronic contracting procedures, and consent practices in light of the Attorney General’s guidance. The message from New Jersey regulators is clear: scrutiny of fee practices is likely to intensify, and the concept of a “junk fee” may extend well beyond traditional disclosure issues.

Alan S. Kaplinsky & Adam Maarec

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Illinois Enacts Licensing and Supervisory Framework for Buy Now, Pay Later Providers

On June 25, 2026, Illinois Governor J.B. Pritzker signed into law the Buy-Now-Pay-Later Loan Consumer Protection Act (the “Act”), Public Act 104-475. The legislation establishes a comprehensive licensing and supervisory framework for providers of buy now, pay later (BNPL) products operating in Illinois.

The Act, which becomes effective on January 1, 2028 (unless a later effective date is provided by rule), places Illinois among the first states to enact a regulatory regime specifically tailored to BNPL products, although BNPL products are covered by existing laws in a number of states. (See our blog post about New York’s comprehensive BNPL law here. You can also listen to our podcast about the New York law here.) While much of the statute focuses on licensing, examinations, and enforcement, the law also contains expansive anti-evasion provisions that may have significant implications for bank-fintech partnerships and other arrangements involving exempt entities.

Broad Definition of BNPL Loan

The Act defines a “buy-now-pay-later loan” as closed-end credit provided to a consumer in connection with a particular purchase of goods or services that either:

  • is payable in four or fewer installments; or
  • has a term of 120 days or less.

Importantly, the definition expressly includes both no-interest BNPL products and products that impose interest, finance charges, or both.

The definition excludes several categories of transactions, including:

  • seller-financed credit in which the creditor is the merchant selling the goods or services (subject to certain exceptions);
  • motor vehicle loans;
  • residential mortgage loans; and
  • loans made to merchants to finance inventory purchases.

The statute also authorizes the Secretary of Financial and Professional Regulation to identify additional products as BNPL loans by rule.

Licensing Requirement

Subject to certain exemptions, no person may engage in the business regulated by the Act without obtaining a license from the Illinois Department of Financial and Professional Regulation.

The licensing requirement applies broadly to persons that:

  • offer or make BNPL loans;
  • purchase all or part of a BNPL loan;
  • arrange BNPL loans for third parties;
  • act as an agent for a third party in making BNPL loans; or
  • service BNPL loans.

As with other licenses that Department administers via the NMLS, applicants must submit extensive information regarding their ownership, management, financial condition, business operations, and legal and regulatory history. Among other things, applicants must provide audited financial statements.

Exemptions

The Act exempts a number of entities from its requirements, including:

  • banks;
  • savings banks;
  • savings and loan associations;
  • credit unions; and
  • insurance companies organized, chartered, or authorized to do business under state or federal law.

In addition, merchants and merchant platforms are generally exempt if they merely make BNPL products available through agreements with licensed or exempt lenders and do not originate, underwrite, service, or retain an ownership interest in the loans.

Passive investors that purchase or hold interests in loans also are exempt, provided they do not otherwise participate in origination, underwriting, servicing, or control servicing activities.

The Act does not expressly exempt an entity that holds a Consumer Installment Loan license, which is required to make consumer purpose loans with rates in excess of 9% (and which would already cover a BNPL loan with a rate in excess of 9%), although the Secretary is also authorized to exempt additional persons or transactions by rule.

Expansive Anti-Evasion Provisions

Perhaps the most noteworthy aspect of the Act is its broad anti-evasion language.

The statute applies not only to entities that directly make BNPL loans, but also to any person that the Department determines is engaged in a transaction that is “in substance a disguised loan or a subterfuge” designed to evade the Act.

Moreover, a person may be deemed to be the lender subject to the Act notwithstanding claims that it is merely acting as an agent or service provider for an exempt entity.

A person may be treated as the lender if, among other things:

  • it holds the predominant economic interest in the loan;
  • it markets, brokers, arranges, or facilitates the loan and possesses the right or first right of refusal to purchase the loan or receivables; or
  • the totality of the circumstances indicates that the transaction has been structured to evade the Act.

The statute identifies several factors supporting a finding that a person is the true lender, including indemnifying an exempt entity against loan-related risks, predominantly designing or controlling the loan program, or purporting to act as an agent for an exempt entity while directly lending in other states.

These provisions closely resemble “true lender” concepts that have appeared in other state lending laws and may attract significant attention from both industry participants and regulators.

Broad Supervisory and Enforcement Authority

The Act grants the Secretary extensive supervisory powers, including authority to:

  • conduct examinations of licensees and certain affiliates;
  • subpoena documents and witnesses;
  • issue orders to halt unsafe, unsound, or unlawful practices;
  • investigate complaints;
  • impose fines;
  • suspend or revoke licenses; and
  • adopt rules necessary to administer the Act, protect consumers, and promote fair competition.

In addition, the Secretary may impose civil penalties of up to $1,000 per day against a licensee for failing to respond to regulatory requests or reporting requirements.

Why the Act Matters

The Illinois Buy-Now-Pay-Later Loan Consumer Protection Act is significant for several reasons.

First, it represents one of the earliest comprehensive state efforts to regulate BNPL providers through a dedicated licensing and supervisory framework.

Second, the Act adopts a remarkably broad approach to determining who is subject to regulation, reaching beyond traditional lenders to arrangers, agents, servicers, and other participants in the BNPL ecosystem.

Third, the statute’s anti-evasion and true-lender provisions could have important implications for bank-fintech partnerships and other structures involving exempt entities.

Fourth, loans made by a person not licensed or exempt are void and unenforceable.

Finally, because the Act gives the Department broad rulemaking authority, affected companies should closely monitor future regulations implementing the statute.

Companies participating in the BNPL ecosystem, or otherwise making short term consumer loans, should begin assessing whether they will be required to obtain an Illinois license and whether existing business arrangements could be affected by the Act’s expansive anti-evasion provisions.

Alan S. Kaplinsky, John D. Socknat & John L. Culhane, Jr.

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The FTC’s Sweeping Noncompete Ban May Be Gone, But Employers Are Not in the Clear

On April 15, 2026, the Federal Trade Commission announced an enforcement action against one of the nation’s largest pest-control companies, Rollins, Inc., ordering the company to stop enforcing noncompete agreements against more than 18,000 workers nationwide. The FTC simultaneously sent warning letters to 13 other pest-control companies, signaling broader scrutiny of noncompete practices across the industry. The action is the latest in a series of case-by-case enforcement efforts under Chairman Andrew N. Ferguson’s leadership and underscores that, even without a nationwide rule, the FTC remains focused on noncompetes it views as overbroad or unjustified.

Background: The FTC’s Shift to Case-by-Case Enforcement

The FTC’s broad Noncompete Rule—which would have banned most noncompete clauses nationwide—was blocked by a federal district court in August 2024 and never took effect. In September 2025, the FTC moved to dismiss its appeal and accede to vacatur of the rule. Since then, the Commission has pivoted to individual enforcement actions under Section 5 of the FTC Act, targeting noncompete agreements it deems unfair methods of competition on a company-specific basis. Chairman Ferguson outlined this approach at a January 2026 FTC workshop, stating that the FTC should focus enforcement on noncompetes that do not advance a procompetitive purpose or are not narrowly tailored.

FTC’s Action Against Rollins Shows Noncompetes Still Risk Facing Federal Scrutiny

According to the FTC’s administrative complaint, Rollins imposed noncompete agreements on nearly all employees—including pest-control technicians, customer-service representatives, and other relatively low-wage workers—typically barring them from working in the pest-control industry for two years within a 75-mile radius of any of more than 700 Rollins locations across 49 states. The FTC alleged that:

  • Employees had no meaningful ability to negotiate the noncompete terms and received no additional compensation or consideration for signing.
  • Employees were asked to sign agreements with little or no time to review or understand them.
  • Rollins aggressively enforced the agreements, issuing hundreds of cease-and-desist letters and filing lawsuits against former employees.
  • The noncompetes denied job opportunities, restricted worker mobility, likely suppressed wages and benefits, and discouraged former employees from starting competing businesses.

The FTC ordered Rollins to cease entering, maintaining, enforcing, or threatening to enforce noncompete agreements. The order—which has a 10-year term—further required Rollins to provide notice to all current and former employees that they are no longer bound by noncompetes and are free to compete, including by starting their own businesses. Notably, the order excludes certain senior employees who meet a heightened threshold for access to competitively sensitive information, specifically directors, officers, or defined senior leaders who exercise policymaking authority and are eligible for equity or equity-based compensation.

Alongside the Rollins action, Chairman Ferguson sent warning letters to 13 other pest-control companies advising that their noncompete practices may cause similar competitive harms. The letters urge a comprehensive review of employment agreements—including noncompetes—for tailoring and legal compliance, noting that lower-income workers feel the injuries of overbroad noncompetes most acutely.

Chairman Ferguson’s Statement: “Not All Noncompetes Are Unlawful”

In a joint statement with Commissioner Mark R. Meador, Chairman Ferguson emphasized that the Rollins action does not signal a categorical ban on noncompetes. Ferguson stated that some noncompetes have procompetitive effects while others are anticompetitive, and that the FTC follows the general common-law rule that noncompetes are lawful when they go no further than necessary to protect specific, identifiable, valid employer interests that could not be protected without the restriction. However, he characterized Rollins’ indiscriminate “general policy” of requiring every worker to sign a noncompete, regardless of position or responsibilities, as an approach that “cries out for scrutiny under the antitrust laws.”

What This Means for Employers

The FTC described the Rollins action as part of a broader prioritization of deceptive, unfair, and anticompetitive labor-market practices beginning with the February 2025 launch of its Joint Labor Task Force. Since then, the FTC has taken action against other companies over employee noncompetes, including issuing noncompete warning letters to healthcare employers and staffing companies, and pursuing no-hire restrictions used. The Rollins action demonstrates a clear signal that the FTC intends to continue that enforcement sequence.

The FTC’s actions in the last year demonstrate that the agency’s interest in noncompete enforcement is intensifying even without a nationwide ban in place. Employers, particularly those that apply noncompetes broadly to rank-and-file, hourly, customer-facing, or lower-wage workers, should consider the following steps:

  • Audit existing noncompete programs. If your organization uses restrictive covenants, now is a good time to audit their scope, duration, geographic reach, and supporting consideration. With the FTC’s Noncompete Rule vacated, state law is the controlling framework, and the landscape varies significantly: several states ban or restrict noncompetes for lower-wage workers, impose notice and/or timing requirements, and carry costly statutory penalties for noncompliant agreements. With the nuances associated with noncompetes, employers, especially those operating across multiple states, should work with employment counsel to ensure their agreements satisfy all applicable requirements.
  • Reassess “one-size-fits-all” policies. The FTC took particular issue with Rollins’ blanket approach to noncompetes. Employers that require all or most employees to sign noncompetes without differentiating by job function, seniority, or actual exposure to trade secrets face elevated enforcement risk.
  • Evaluate less restrictive alternatives. Consider whether legitimate business interests can be protected through confidentiality agreements, trade secret protections, or nonsolicitation provisions rather than broad noncompetes. Be aware, however, that depending on the language of alternative agreements, some states may interpret those as unenforceable noncompetes—making counsel review of employment agreements essential.

Ballard Spahr’s Labor & Employment Group will continue to monitor FTC noncompete enforcement developments and provide updates. Our group also routinely provides guidance to clients on the development and enforcement of employment agreements and litigation involving enforcement. If we can assist you, please reach out to a member of our Group.

Dana Mydland, Shirley S. Lou-Magnuson & Brian D. Pedrow

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Employer Beware: New Requirements for Employers With New Hires in Colorado

Employers hiring employees in Colorado beware! You may inadvertently commit a hate crime without even knowing it.

The Colorado legislature ended the 2026 regular session by passing a law that makes it a hate crime for an employer, or that employer’s agent, to “demand, confiscate, retain, or otherwise require an individual who is an employee or an applicant for employment or who is performing work or seeking to perform work for the employer in any capacity . . . to surrender the individual’s government-issued identification.”

As most U.S. employers know well, federal law imposes an affirmative obligation on employers to verify an applicant’s eligibility to work in the United States when you hire someone. Colorado’s new law doesn’t prevent you from completing such verification, but it does now impose an obligation that you “retain an individual’s government-issued identification only for as long as necessary to verify the individual’s employment eligibility and make a copy of the card.” The law also says that holding onto this identification for “more than ten hours” is always too long.

For most employers, especially those who use E-Verify, compliance with this new requirement isn’t going to be an issue. However, every employer hiring someone in Colorado, including those who never “retain” anyone’s government-issued identification, still needs to take action to ensure compliance with this new law. Specifically, in addition to making sure you don’t “demand, confiscate, retain or otherwise require” someone to “surrender” their government-issued identification, employers must provide notice of this new “hate crime” when verifying employment eligibility.

The notice must be: 1) in writing, 2) in English, and 3) if the employer knows that English isn’t the individual’s primary language, in that individual’s primary language as well. And sending the notice isn’t enough – you also need to get an acknowledgement from each individual you send the notice to confirming it was sent. You then need to keep a copy of both the notice and the acknowledgement in the person’s personnel file.

Colorado-based companies – or any who consider applicants from this state – are well advised to immediately implement appropriate mechanisms to ensure compliance with Colorado’s newest requirement. Failure to comply is a class 2 misdemeanor and this law has a private cause of action, meaning any individual who believes they have been harmed by a failure to comply can bring a lawsuit against the employer or the employer’s agent to recover damages and/or a court order that the identification be returned.

Beth Ann Lennon

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CIPA Reform: Is a Whittled-Down Version of SB 690 on the Verge of Becoming Law? A Recent Committee Vote Gives Businesses a Glimmer of Hope

In recent years, a handful of pro se plaintiffs and plaintiffs’ firms have sent tens of thousands of demand letters to businesses, threatening class action lawsuits under the California Invasion of Privacy Act (CIPA) unless those businesses pay settlements averaging $10,000 to $25,000.

The demands typically assert claims under CIPA arising from businesses’ alleged use of common tracking technologies on their websites. One of the most prominent theories is based on Section 638.51 of CIPA, which prohibits the installation of “pen registers” or “trap and trace” devices without a court order. The viability of this legal theory has not been squarely addressed by any appellate court yet—though appeals are pending, including in Variety Media, LLC v. Superior Court—and thus trial courts have mostly allowed pen register claims to survive early motions to dismiss. This has only emboldened plaintiffs. By some estimates, plaintiffs’ firms asserting these claims have used CIPA allegations to collect over half a billion dollars in settlement payments from businesses.

Businesses rallied for reform, but early efforts at a legislative fix—known as Senate Bill 690—seemingly stalled.

Last night, however, the California Assembly’s Committee on Privacy and Consumer Protection held a meeting that gave businesses a glimmer of hope. A long line of local and national business associations and community members appeared at the meeting to voice their strong support for a revised version of SB 690, which is more narrowly focused on stemming the tide of demands asserting claims under CIPA’s pen register provision. As amended, the bill contemplates a retroactive elimination of Section 638.51’s private right of action. The bill received 10 votes, with the vote left open for absent committee members. The tone of the discussion appeared cautiously optimistic. Both proponents and opponents seemed to recognize that work remains to be done, but that the bill could reach a point that would be tolerable for both sides.

The legislature enters its summer recess on adjournment on July 2, 2026, and reconvenes on August 3, 2026. For SB 690 to have any meaningful impact this year, it will need to be passed into law before the legislature adjourns on August 31, 2026.

J. Matthew Thornton, Lexi Chapman & Elizabeth A. James

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