Investigative timeline as alleged
According to Bishop, the CFPB’s investigation of Townstone lacked a sufficient factual basis and was influenced by animosity towards the owner’s viewpoints. The investigation began after the CFPB ran a “redlining screen” on data submitted via the Home Mortgage Disclosure Act (HMDA), leading to concerns about potential discrimination in mortgage applications.
Allegations were made that Townstone’s owner encouraged lending to low-income applicants and made statements about the lack of African-American loan officers. The bureau also used audio analytics software to analyze a radio show hosted by the company, which was deemed political and critical of the CFPB.
Marx Sterbcow, managing attorney at Sterbcow Law Group, described the bureau’s conduct as disturbing, especially in light of the minimal offensive content found in the radio show recordings. The investigation continued with a focus on the company’s views on race and racism, citing intentional discrimination and a need for deterrence.
The bureau allegedly misrepresented enforcement guidance to support their case, omitting key information about the limitations on damages for violations of Regulation B. Despite Townstone’s response to the allegations and evidence showing no offense in the radio show remarks, the CFPB persisted with the case.
After a lengthy legal battle, Townstone ultimately prevailed in court, but the CFPB vowed to appeal the decision. The case raised concerns about the need for oversight and reform within the bureau to prevent abuse of power and political agendas.
Where things could go next
Sterbcow emphasized the importance of structural reform within the CFPB to prevent misuse of enforcement actions for political purposes. He anticipated congressional hearings on the matter and emphasized the need for proper assessment of cases to ensure fairness and accountability within the agency.