Funding cuts at the key mortgage industry watchdog have reportedly left it scrambling for solutions
The Consumer Financial Protection Bureau (CFPB) is reportedly considering furloughing workers amid deep funding cuts, the latest in a series of setbacks to hit the key mortgage watchdog this year.
Two sources with knowledge of the matter told Reuters on Thursday that senior leaders at the bureau are weighing up the move as fears grow that it could find itself unable to meet payroll and severance costs in the next fiscal year.
While it’s played a crucial role in recent years in issuing and enforcing rules that govern mortgage lenders, servicers, and brokers, the CFPB has seen huge changes in 2025 as part of huge cost-cutting and savings measures implemented by the Trump administration.
The Department of Government Efficiency (DOGE), then led by Elon Musk, shuttered the regulator’s offices shortly after Trump took office and axed key officials, planning to cull 90% of its workforce.
Those efforts to dismiss staff remain in limbo as a court challenge rumbles on. But Republicans in the Senate pushed ahead with a cut to maximum CFPB funding from 12% of the Federal Reserve’s earnings to 6.5%, leading the agency to notify employees of potential staffing reductions.
What the crisis means for the mortgage sector
For the mortgage industry, efforts to roll back the CFPB could have significant implications related to regulation and oversight.
But while those moves could strip back federal involvement in regulating the industry, few believe it would create a free-for-fall or completely remove oversight of the mortgage space.
Amid Musk’s gutting of the agency in February, Davis Wright Tremaine LLP partner Chava Brandriss told Mortgage Professional America the CFPB was far from the only regulator with an eye on the mortgage industry.
“We all still have to comply with all the laws that the CFPB has jurisdiction to enforce. And there are also other regulators – consumer, state regulators, banking regulators – depending on whether a mortgage participant is a bank originator, or servicer, or nonbank,” she said. “You’ve got different regulators and consumers out there still looking to enforce the laws.”
And Daniella Casseres, partner and head of the mortgage regulatory practice group at Mitchell Sandler, also underlined the growing reach of state regulators.
“They are enforcing more, they’re implementing new laws that give them more enforcement teeth – similar to what the CFPB had,” she said. “I’m seeing a lot more investigations and power behind the states.”
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