1.What Mortgage Companies Need to Know

Earlier this week, a memo from Mark Paoletta, the CFPB’s Chief Legal Officer, outlined the Bureau’s supervisory and enforcement priorities for 2025. Most notably, the CFPB will reduce its number of supervisory “events” by 50%.

The rationale? According to Paoletta, the Bureau plans to “shift resources away from enforcement and supervision that can be done by the states.” In short: expect federal regulators to take a back seat while state agencies take the lead in monitoring nonbank mortgage companies and other financial service providers.

This marks a dramatic reversal from recent years. In 2012, 70% of CFPB supervision was directed at banks and only 30% at nonbanks. Today, that ratio has flipped—with over 60% of oversight focused on nonbanks. Paoletta’s memo signals a reversion to the original intent of the Bureau, with more emphasis on large depositories and a reduced footprint in the nonbank space.

1.1Mortgages Still a Top Focus

While the CFPB may be stepping back overall, the memo made clear that mortgage-related compliance remains a core priority—particularly where consumer complaints are concerned.

Key areas of continued focus include:

♦ Violations of the Fair Credit Reporting Act (Regulation V) by data furnishers;
♦ Violations of the Fair Debt Collection Practices Act (Regulation F);
♦ Mortgage origination and servicing practices.

The memo also stressed a shift in approach—from aggressive enforcement to remediation and collaboration. In Paoletta’s words, supervision should focus on “conciliation, correction and remediation of harms” and aim for “measurable benefits to consumers.”

1.2Fair Lending Approach Narrows

In another notable change, the CFPB announced it will no longer pursue redlining claims based on statistical evidence alone. Instead, it will limit fair lending enforcement to cases involving proven intentional racial discrimination and actual identified victims. This is a marked departure from the Bureau’s prior use of disparate impact theory and reflects a significant narrowing of its fair lending stance.

1.3Major Staff Reductions Underway

On Thursday, the CFPB delivered another jolt: nearly 90% of its workforce—approximately 1,500 out of 1,700 employees—were notified that their positions are being eliminated. Staff were told they would lose system access by April 18, with separation from federal service scheduled for June 16.

In an internal message, Acting CFPB Director Russel Vought explained that the cuts are “necessary to restructure the Bureau’s operations to better reflect the agency’s priorities and mission.”

This workforce reduction suggests a leaner, less centralized CFPB—one that will rely more heavily on collaboration with state regulators and possibly external partners.

1.4What This Means for You

While fewer audits and federal inquiries may sound like a reprieve, this shift is far from a free pass. In fact, it places even greater importance on state-level compliance. Many state regulators have already ramped up their oversight in recent years, and this latest development will likely accelerate that trend.

Mortgage companies—especially brokers and nonbanks—should:

♦ Review and refresh state-specific compliance programs;
♦ Ensure TRID, Reg Z, and licensing obligations are airtight;
♦ Prepare for more direct interaction with state examiners and attorneys general;
♦ Stay on top of consumer complaints and ensure prompt resolution;
♦ Monitor developments in states with historically aggressive regulators (e.g., California, New York, Illinois, Massachusetts).

1.5Bottom Line

The CFPB is stepping out of the spotlight, and the states are stepping in. That means your compliance risk is shifting—not disappearing. Stay proactive, double down on your state-level strategy, and don’t assume that a quieter CFPB means smooth sailing.

We’ll continue tracking these changes and keep you updated with actionable insights every step of the way.