Why we could be headed for more of the same despite the CFPB's winding-up
The US mortgage industry may be abuzz with speculation about what life without the Consumer Financial Protection Bureau (CFPB) might look like – but few mortgage professionals are under any illusions that a new era of widespread deregulation is underway.
That’s according to Angel Oak Mortgage Solutions president Tom Hutchens (pictured), who told Mortgage Professional America that the overall lending landscape was unlikely to see a big shift despite the upheaval seen at the key mortgage regulator during the past two weeks.
Top staff have been let go, the bureau’s offices shuttered and staff ordered to cease rulemaking work – but Hutchens pointed out that a strict compliance regime will remain in place even if the CFPB is eradicated completely.
“There’s nothing to react to because we don’t know where it’s going to land. And regardless of whether it lands that there’s no longer a CFPB or it’s changed dramatically, it’s not going to change a lot of what we do day in and day out,” he said.
“Most mortgage companies have been built and operate under the CFPB guidance that we’ve been following for the last 10-plus years, so I don’t think anybody’s thinking, ‘OK, well, now we can just change how we do business tomorrow because there’s not a CFPB’.”
How will the non-prime space be impacted?
In the non-QM space, Hutchens said the guidelines that have emerged from Dodd-Frank have largely proven positive for the industry, even though some mortgage professionals may take issue with the enforcement of policy and regulations by the CFPB.
Among the best examples of how those rule changes have boosted the industry, according to Hutchens: appraiser independence. “We were a lender back in the early 2000s prior to the Great Financial Crisis and we weren’t aware of how poor the quality of appraisals was until it was too late,” he said.
President Donald Trump has nominated Jonathan McKernan to lead the Consumer Financial Protection Bureau (CFPB) at a time when the agency’s future is more uncertain than ever. https://t.co/qQs5MSH6Ef
— Mortgage Professional America Magazine (@MPAMagazineUS) February 17, 2025
“But now, the appraisal independence that’s been how the entire mortgage market has operated for over 10 years – we as a lender, and all lenders, are very confident in the value of the properties we’re lending on. And that’s good for everybody: buyers, borrowers, and mortgage lenders and real estate agents. It’s just good for the whole real estate industry.”
Removing CFPB won’t mean scrapping regulatory framework
Even with the CFPB in place, national lenders were required to follow state-by-state guidelines – and if the bureau is torpedoed, some have raised the scenario of the states stepping up with even tougher rules to fill that void.
“I don’t know that it would become more cumbersome, but it certainly could. If the states believe ‘Well, we’ve got to make our own regulations,’ that would not be good for the industry,” Hutchens said.
“I don’t know everything [the current administration] thinks about the CFPB, but they do believe, and I think they are correct, that regulation does add cost into the process with compliance and following all these different regulations. It’s costly to put that into the process of originating the loan.”
The opening weeks of the Trump administration have seen plenty of speculation about what the future of the financial sector looks like and whether the sweeping changes introduced will prove a net positive or negative – but for now, Hutchens is taking a wait-and-see approach on that question.
“There’s lots of chatter and lots of discussion – good and bad – about a lot of these policies that are being discussed and the impact that they might have [including] tariffs, obviously,” he said. “But as of right now, not a lot has been implemented that would suggest a lot of change in the mortgage space. It’s not clear what’s going to happen with the CFPB but whatever happens we’ll all adjust accordingly.
“I believe that housing is a big priority and improvement to the housing market is a big priority to the current administration and I don’t think there are any intentions to implement policies that would jeopardize improvement in the housing and mortgage markets.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
