Mortgage attorney shares what brokers should be looking for in the new year
After nearly fading away to nothing in 2025, could the Consumer Financial Protection Bureau (CFPB) be preparing a comeback in 2026?
That question is complicated because there are limits on how large the current CFPB can actually become. However, changes in the Federal Reserve’s balance sheet and a judge’s ruling last week could set up a bounce-back year.
Last week, a federal judge rejected the Trump administration's claim that it was legally barred from securing funding for the CFPB, calling it an attempt to circumvent a ruling preventing the agency's shutdown.
Part of those claims revolved around the idea that the Fed didn’t have the money to fund the CFPB. But changes in the Fed’s balance sheet may change that, according to Peter Idziak (pictured top), a senior associate and mortgage attorney at Polunsky Beitel Green. Now, CFPB acting director Russ Vought may need to ask the Fed for more funds.
“I think at the federal level, you can't ignore what's going on with the CFPB,” Idziak told Mortgage Professional America. “There is that Office of Legal Counsel opinion that says that when the Fed doesn't have profits, it doesn't have earnings, so the CFPB can't draw any funds. So there's some thought that maybe they'll shut down.
“But now it seems like Vought sent a letter to Powell, basically saying, ‘We hear you might be returning to profitability soon.’ He has informed Congress that I think it’s something like $225 million is required to fund all the statutorily required aspects of the CFPB.”
A return to rulemaking?
While funding may be returning to the CFPB that many thought would be shut down before the start of 2026, Idziak cautions that this doesn’t mean it will return to the same level of rulemaking and enforcement as before 2025.
“You may see a CFPB that actually restarts a bit of its rulemaking and maybe some enforcement,” he said. “Although I'd say minimal at best, and maybe some supervision. They really are the 800-pound gorilla when it comes to this. So to the extent that they seek to move in, back to a more active role, you may see states reallocate resources elsewhere.”
Part of the reason why Idziak said the return would be minimal is that there have been reductions to the agency that limit its maximum funding and staffing levels.
“And I just would point out the CFPB’s maximum budget request was cut basically in half,” Idziak said. “If you look at what their numbers were under Chopra, without a change to legislation, they're not going to get back to the size that they were, even if you had a Democratic administration. Unless they increase the cap back to 12%.”
‘Second mouse gets the cheese’
One other issue that will continue into the new year is the regulation of artificial intelligence (AI), both in mortgage lending and in everyday life. Idziak said one of the biggest challenges right now is the wide range of regulations across individual states.
“The big thing, I think, is going to be AI, and that's not specifically targeted at mortgage lending,” he said. “You have a lot of states that, and it's not just blue states but a red and blue state patchwork, that have passed a lot of state-level AI legislation. That does impact mortgage lending and mortgage brokerages.
“Now you have Trump coming in with his executive order, and he is going to take a look at those. I think that could definitely impact how AI is developed and deployed across the industry in 2026 because the number one question that we're getting asked right now is about compliance issues related to AI.”
As brokers and lenders consider adopting new technology, each must decide which level of AI technology to incorporate. While parts of the mortgage process remain off-limits to AI, there are business use cases that can help the industry.
“What's interesting to me is to see how different lenders' approaches have been to what they're using AI for, and how they're deploying it,” Idziak said. “There are a lot of little things where some lenders say, ‘We really want to do chatbots or AI LOs.’ Others are like, ‘We don't want to really do anything that's consumer-facing at this point. So we're going to keep it all internal.’”
JD Power’s Bruce Gehrke highlights how tech adoption is reshaping mortgage lending, improving efficiency and customer experience while freeing brokers to focus on relationships.https://t.co/prN2JZIyf3
— Mortgage Professional America Magazine (@MPAMagazineUS) January 5, 2026
While setting a national standard for AI use would provide a consistent set of rules and limit confusion for brokers and lenders operating in multiple states, Idziak said there is something to be said for states having the right to set their own rules.
“This is one area where, on the one hand, a single standard at the federal level might be better and cheaper for lenders and brokers that operate across many states,” he said. “Although, in my opinion, one of the great things about the United States and our federal system is that you have these 50 states that whenever you have these new areas, can try out different approaches to regulating a new technology. And over time, you figure out what works and what doesn't work.
“We're just going to wait and see, but it's also sort of a situation where it might be the second mouse gets the cheese. You don't want to be the lender that's out there doing something that no one else is doing, because you might be the one who gets slapped down.”
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