‘You might not love the CFPB, but there’s a necessity for it on certain regulations’

With legislation to curb the use of trigger leads finally over the line after a huge lobbying and advocacy effort across the mortgage sector, attention is turning to the next legislative hurdles and regulatory priorities facing the industry.

Among the most significant of those is loan originator compensation, with the Consumer Financial Protection Bureau (CFPB) reportedly continuing to weigh changes to LO comp disclosure requirements.

There’s little indication yet on what those moves – or a possible timeline – might look like. But Broker Action Coalition (BAC) executive director Rachel Clark (pictured top) told Mortgage Professional America at Rocket Pro’s recent RPX event in Detroit that the subject was getting plenty of attention.

Some speculation has suggested the CFPB, which has seen sweeping cuts and a huge rollback of regulatory oversight across many sectors, could be about to drastically reduce disclosure rule requirements.

But Clark emphasized the need to find a middle ground. “When we talk about comp, we also want to make sure somebody doesn’t come in and just clean the books completely,” she said. “There are some things that are beneficial.”

While the industry is still in the dark on when the CFPB plans to announce its plans on LO comp, Clark said the BAC has been focused on ensuring it’s in a position to communicate its own recommendations to the Bureau if a feedback process begins.

“We want to be ready to go,” she said. “Our biggest thing is just being prepared so if they do put a comment period out, we’re ready to say, ‘Here’s what we want. Here’s what we don’t want,’ and have really vetted that response through our brokers, our partners as wholesale lenders.”

“Our team is developing a plan of what we want to keep, what we want to get rid of, and what we do want to change so that when the CFPB opens it up, we can say, ‘Here’s our situation from the broker community. This is what we want.’”

What happens if the CFPB vanishes entirely?

It goes without saying that too much oversight can hinder brokers and weigh against the effectiveness of the mortgage sectors. Still, Clark cautioned against a complete pullback from industry regulation by the CFPB.

“Say they take the CFPB away completely,” she said. “At that point, are the states going to take up those roles and make guidelines themselves? What then happens when you’re licensed in multiple states and wondering, ‘I’m in Texas. This is how Texas looks at it. But what about Maryland?’ What if they look at that differently, and it’s conflicting advice in a sense?

“You might not love the CFPB, but there’s a necessity for it on certain regulations, to have that central spot to say: ‘This is going to be the guidance across the country.’”

Don’t expect huge changes despite CFPB cuts

In February, a cost-cutting effort across the federal government led by Elon Musk’s Department of Government Efficiency (DOGE) saw the CFPB’s doors shuttered and scores of key staff laid off.

But few in the mortgage industry believe the sector is about to become an unregulated Wild West anytime soon.

What brokers most want on the regulatory front, according to Clark, is parity and a level playing field.

“Whether it’s a broker or a banker, we want to play by the same rules. That’s where we’re looking at the CFPB and LO comp: How do we make it fair for brokers to be able to do the same things bankers can do?” she said.

“If regulations are going to be put on brokers, they should be put on bankers too instead of just saying, ‘Hey, you’re a broker – you need to do X, Y, and Z extra, but you have to make X, Y, and Z less [money]. It’s not really fair at that point.”

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