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Anticipating Regulatory Changes Amid Leadership Transition

November 9, 2024

As we approach the inauguration of President-elect Trump, the mortgage industry stands on the brink of what could be significant regulatory shifts. With a focus on deregulation likely to be a cornerstone of the new administration, the regulatory practices of the Consumer Financial Protection Bureau (“CFPB“) are poised to undergo a substantial transformation.

1.Potential Deregulation of the CFPB

Under the incoming Trump Administration, a key objective will likely be the deregulation of the financial services sector, targeting the CFPB’s regulatory and enforcement practices. This could lead to a shift in how compliance is enforced across the mortgage industry, potentially rolling back some of the stringent measures established during the previous administration. Companies should brace for changes that could affect everything from compliance requirements to enforcement actions, as the new administration seeks to create a more business-friendly environment.

2.Upcoming Staffing Departures

In light of the transition, significant staffing changes are expected within key housing leadership positions. Notably, CFPB Director Rohit Chopra will likely be removed from his role when the new administration takes office. This follows a precedent set during President Trump’s first term, where political appointees were swiftly replaced. Other key departures include Sandra Thompson from the FHFA and various HUD officials, including Acting HUD Secretary Todman and FHA Commissioner Julia Gordon. The resulting vacancies could usher in new leadership that aligns with the anticipated deregulatory focus, reshaping priorities and strategies within these agencies.

3.State Regulators Ready to Fill Gaps

Despite the shifts at the federal level, it’s crucial to remember that state regulators have a history of stepping in to fill any regulatory gaps that may arise. After the 2016 changes to the CFPB, state regulators heightened their scrutiny of lenders and mortgage brokers, ensuring compliance with consumer protection standards. This trend is likely to continue, with state authorities maintaining rigorous oversight to protect consumers from potential predatory lending practices. Companies in the mortgage sector should remain proactive in their compliance efforts, understanding that while federal regulations may relax, state-level enforcement may intensify.

4.Conclusion

As we navigate this period of transition, mortgage lenders and brokers must stay informed about the changing regulatory landscape. By anticipating potential shifts in federal enforcement and remaining vigilant regarding state compliance requirements, the industry can effectively adapt to the evolving environment and continue to prioritize consumer protection.