Instead of pursuing the nonbank registry rule, the CFPB has decided to shift its focus on addressing urgent threats to consumers, as stated in a recent announcement.
Timeline of developments
The proposed rule, initially introduced in late 2022, mandated nonbank entities to report public agency enforcement actions and court orders for inclusion in a nonbank registration system (NBR) – an online database accessible to the public. The finalized rule was officially released in July 2024, with an enforcement start date of Sept. 16, 2024.
Originally, smaller nonbanks under CFPB supervision were required to register by April 14, 2025, with all covered nonbanks expected to comply by July 14, 2025.
Criticism from mortgage trade groups mainly revolved around the rule’s perceived redundancy. Independent mortgage banks (IMBs) already report similar information through the Nationwide Multistate Licensing System and Registry (NMLS).
The NMLS MU1 forms currently necessitate IMBs to disclose any state or federal regulatory actions, along with specific court actions, from the past decade. Failure to adhere to NMLS reporting guidelines can result in fines.
Reaction from the industry
Mortgage trade associations have welcomed the pause on the nonbank registry rule.
The Community Home Lenders of America (CHLA), a national non-profit organization representing small- and mid-sized community mortgage lenders, commended the recent decision for providing “regulatory relief for smaller lenders from redundant Registry requirements.”
Another trade group, the Mortgage Bankers Association (MBA), had previously urged the CFPB in January to postpone the compliance deadlines. At that time, MBA’s president and CEO Bob Broeksmit criticized the rule for being “costly and duplicative.”
In response to the current halt, MBA’s senior vice president of residential policy and strategic industry engagement, Pete Mills, suggested that the CFPB could have integrated its enforcement information on mortgage companies into the comprehensive consumer-facing database maintained by the Conference of State Bank Supervisors’ NMLS Consumer Access portal.
“MBA is closely monitoring the CFPB’s future actions and will advocate for the consideration of issuing an NPR to rescind the regulation,” Mills stated.