Inspections that were underway have stopped, while new audits are not expected anytime soon
Audits of mortgage brokerages that the Consumer Financial Protection Bureau (CFPB) started in 2024 have been halted, and no further audits are expected anytime soon, according to one industry expert.
Brendan McKay (pictured top), chief advocacy officer at the Broker Action Coalition (BAC), said the CFPB, a key mortgage industry watchdog that’s faced sweeping cuts under the Trump administration, does not appear to be auditing brokerages this year.
“Our current understanding that we've heard from a number of sources is that they're not there, and they are no longer happening,” McKay told Mortgage Professional America. “And the audits that were active have been terminated. We're looking to set up a meeting with the CFPB next month, and we'll confirm all of that. But I have gotten the confirmation from brokerages that were going through the audits that they've been told they're not happening anymore.”
In December, McKay posted on his LinkedIn account information about how the CFPB had created regional teams to complete brokerage audits.
However, when the Trump administration took over in January, everything changed. It appeared that Trump officials planned to get rid of the CFPB after taking office, but while cuts have taken place in the organization, a federal appeals court ruled Friday that the administration can shrink the CFPB but cannot dismantle it completely.
Mortgage lawyer Peter Idziak from Polunsky Beitel Green says the CFPB ruling reassures the industry, preventing regulatory uncertainty. He notes lenders feared a total agency shutdown but now expect a “smaller, more efficient” bureau. https://t.co/abGXN08cc2
— Mortgage Professional America Magazine (@MPAMagazineUS) April 2, 2025
While it is mostly business as usual for mortgage brokers after the CFPB restructuring, the apparent pause on audits might come as welcome news – but McKay cautioned against assuming they’re gone for good.
“I'm happy for the brokerages that were going through these audits,” McKay said. “I know it was a lot of pressure, and glad for them to have the relief. But I also think every mortgage brokerage should be ready, because this could change at any moment. I do think it is probably not incredibly likely to happen during this administration.”
Brokerage audits caused by expanding businesses
McKay doesn’t believe the audits were started to necessarily target mortgage brokerages, even though some may have felt that way if they were being audited.
“I do stand by my original logic of this not being a shift of them saying, ‘We didn't care about brokerages to the point that we wanted to audit them before, and now we do because of simply them being mortgage brokers,” McKay said. “That is not what I think happened here.”
He believes the audits were started because some brokerages were growing very large, and the audits ensured that those large brokerages had the proper processes in place.
“I think that mortgage brokerage market share has grown so much,” McKay said. “The size of some of these mortgage brokerages has gotten so big, where, five years ago, I don't know that there was a single brokerage with more than 1,000 loan officers. Now there are many of them, and lending institutions of that size fall under the CFPB-mandated purview.”
While McKay hated to see brokerages undergoing the stress of an audit, he believes many have made necessary changes that will help them should audits resume.
“They're still making a bunch of changes internally in how they do things,” McKay said. “And they wish they didn't have to go through the stress that they did, but they know that they're better off in a more compliantly run business now than they might have been previously.”
A caution to brokerages: Prepare for audits to resume
McKay believes that the audits that did occur have allowed larger brokerages to establish better procedures to protect customers and brokers.
“They're not acting any more or less compliantly, but they have more systems in place that the regulators want to see, and I think that's a good thing,” McKay said. “So, in the short, short term, it’s good. I believe that large financial institutions should see some level of oversight, which is a channel-agnostic statement.”
However, he encouraged brokerages to prepare as if audits could be reinstated in the future.
“I think that brokerages, especially large ones, should use this brief reprieve,” McKay said. “There were some very large brokerages out there that were sweating bullets because they were not even close to the standard of compliance and systems, like having a compliance officer and different things like that.
“So, you got your warning shot, but I do think at some point in the future it's going to come back. And if you plan on being a large brokerage for an extended period of time, use this time now to get your ducks in a row.”
With so much at stake for large brokerages, McKay hopes they take this reprieve as an opportunity to make sure they have guardrails in place, as the next change in Washington could bring a shift in philosophy.
Assuming you won’t face a future audit is not a viable option, according to McKay. “The best advice is just to be ready,” he said. “Hope for the best, prepare for the worst. Large brokerages have a lot at stake. And if they think they'll never have to face this kind of audit, they might be right, but I don't think that's a plan. Getting your ducks in a row so they can get through an audit relatively unscathed is going to take some time, and they should start doing it now.”
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