QUESTION
The CFPB recently withdrew guidance for many policies and legal interpretations. As my company’s Chief Risk Officer and General Counsel, I was asked by our Board to provide an outline of the CFPB's withdrawn guidance and the effect such withdrawal will have on lending and servicing. I have reviewed all the withdrawn documents and written an analysis of their impact. However, I still can’t figure out the difference that the withdrawn guidance makes in our legal and regulatory risks.
So, I am writing you for some feedback. I don’t need an outline of every withdrawn document. What I’m looking for is some insight into the overall impact of withdrawing the guidance. Our external law firm provided an excellent overview. But I would like something more conclusory with respect to the practical effect caused by the withdrawal.
Long time subscriber! Thank you for your outstanding articles. We appreciate your clarity and straightforward responses.
What impact does the withdrawal of the massive withdrawal of CFPB guidance documents have on mortgage originators and servicers?
SOLUTION
RESPONSE
Thank you for your kind words! My articles are a labor of love. I enjoy writing them, and I am grateful that you read them. Before I dig into the implications of the CFPB’s withdrawal of numerous guidance issuances, let me offer a few historical facts.
Recent History
The withdrawals of guidance stems from an Executive Order (EO) 13891 that goes back to 2019, which directed agencies to avoid using guidance documents to create regulatory burdens on the private sector.[i] President Trump issued the EO in his first term, and the Biden administration later rescinded it.
The CFPB is maintaining that the principles the EO outlined are consistent with the requirements of the Administrative Procedure Act (APA), which are noted in the CFPB’s April 11, 2025 internal memo. The memo imposed a moratorium on the issuance of new guidance documents and initiated a full review of all existing guidance. The CFPB is supposed to complete the review by April 25th. Any guidance not explicitly flagged to be retained, with a clear justification, would be subject to rescission.[ii]
Three Reasons for the Withdrawal
There are three ostensible reasons for the withdrawal of these guidance issuances:
1. The CFPB will now only issue guidance when it is truly necessary and when such guidance will lower, rather than raise, compliance burdens for regulated entities.
2. In response to President Trump’s deregulatory initiatives aimed at reducing bureaucracy, the CFPB is scaling back its enforcement activities and, as a result, does not require interpretive guidance to remain in effect at this time.
3. The CFPB has determined that there are no significant reliance interests justifying the retention of the withdrawn guidance. This is because parties generally recognize that guidance is nonbinding and does not create substantive rights.
The Bureau says that while some guidance, or parts thereof, may be reinstated, it does not intend to prioritize enforcement against parties that do not conform to them during the period of withdrawal.
What a Difference a Difference Makes
In your inquiry you state that you “can’t make sense of the difference it makes in our legal and regulatory risks.” Frankly, I think your confusion is justified. I will explain shortly. Suffice it to say, for now, that withdrawal of the guidance documents will have little legal effect. Before getting to my view, let me mention a few areas that seem to be headlining as regulatory issues.
As noted above, the rescinded issuances – the precise number is 67 – cover a range of the CFPB’s activities within its enumerated authorities. The rescinded guidance documents cover a multitude of regulatory areas, including fair lending, overdraft fees, disclosure policies, earned wage access, consumer information requests, the Fair Debt Collection Practices Act, credit reporting, mortgage servicing, whistleblower protections, the use of artificial intelligence, and background screening. I’ll mention a few that relate to residential mortgage compliance.
Selected Withdrawn Issuances
Statement of Policy Regarding Prohibition on Abusive Acts or Practices
The CFPB rescinded an April 2023 policy statement on its Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) authority.[iii] The policy statement argued that entities could be liable for taking advantage of an unreasonable lack of understanding on the part of the consumer that the entity itself had no role in causing. This was a controversial guidance because the mortgage industry felt that the CFPB’s overbroad reading of its UDAAP authority – and its stated intent to pursue enforcement beyond the limits of its policy statements – created uncertainty and, consequently, expanded regulatory risk. In other words, the guidance appeared to be problematic because the CFPB, in its most recent Policy Statement, seemed to claim the right to use UDAAP for virtually any business practice it does not like.
Consumer Complaint Database
The CFPB rescinded guidance related to its public consumer complaint database, including a 2013 final policy statement[iv] that established the public disclosure of certain consumer complaint data that does not include personally identifiable information (PII). The Bureau also rescinded a 2012 final policy statement[v] on exercising its discretion to disclose certain credit card complaint data publicly.
Financial services participants have argued all along that the public database harms a company’s reputation, as, they allege, the consumer complaints are not independently verified and often reflect mere inquiries rather than substantiated grievances. Recently, nine industry groups wrote a letter[vi] urging the CFPB to follow other regulators in running a nonpublic consumer complaint database following Congress’ original intent. As of today’s date, the consumer complaint database remains public on the front page of the CFPB’s website.[vii]
The CFPB also rescinded a 2015 final policy statement[viii], which outlined its approach to publicly disclosing consumer complaints in “free-form text” submitted by consumers describing their experiences with financial products and services. This guidance established the framework, safeguards and rationale for such disclosures.
Nonbank Registry Rule
I have outlined this rule in a previous article here and here. I have yet to meet anyone who liked the rule. The CFPB issued a proposed rule[ix] and requested comment to rescind all provisions of the nonbank registry rule finalized in July 2024.[x] The final rule established a registry of nonbank companies that have entered into consent agreements or that have otherwise been found by the CFPB to violate laws under their jurisdiction. The final rule required debt collectors, mortgage lenders, payday and other nonbank lenders, credit reporting agencies, and other nonbank financial services companies to report regulatory actions taken against them at the federal and state levels.
Within the proposed rule, the CFPB argues that the final rule poses a significant regulatory burden and is unnecessary since Congress has already empowered multiple other federal and state agencies to enforce consumer financial laws.
A Change or Same Difference?
As I mentioned above, your confusion is warranted. Under Loper Bright Enterprises v. Raimondo, a recent U.S. Supreme Court decision, an agency’s official positions on legal questions are largely irrelevant. What matters is the “best reading” of the law. And the CFPB withdrew these documents – with one oddball exception – without even pretending to provide substantive reasoning. To put it bluntly, the CFPB’s mass withdrawal of guidance documents has basically no legal significance.
When I look at the Bureau’s usual issuances, I recognize that they reflect its “considered judgment, reasoning, knowledge, and expertise of the CFPB.”[xi] But when I look at the mass guidance withdrawals, I only see a lack of any considered analysis of the logic of the documents themselves. The Supreme Court made clear that the analysis that the government offers about how the law should be interpreted is important—not the government’s formal position.[xii] That is, in cases involving federal government agencies, there is a “best reading” of the law, which is “the reading the court would have reached if no agency were involved.”[xiii] Indeed, courts have agreed with the reasoning of CFPB guidance documents about how the law should be interpreted. So withdrawing those documents without persuasively rebutting their reasoning is basically meaningless.
In my view, the withdrawal of these guidance documents does not suddenly legalize previously prohibited conduct. The underlying laws and regulations remain unchanged. States can still sue companies for violating these laws under the logic that the CFPB guidance describes, as can individuals in many circumstances. Ironically, then, the likely effect on financial institutions of the withdrawal of the guidance documents is probably going to be greater uncertainty about what the law requires and when institutions may face liability.
In the section above on the Nonbank Registry Rule, I mentioned the contention of a regulatory burden. But, I think it’s fair to ask, a regulatory burden to whom? I wonder if the burden here refers to the burden to companies as a priority over that of effectuating consumer protection. After all, the CFPB states that its “current policy [is] to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.”[xiv] For some reason, I don’t think the “compliance burdens” refer to consumer protection requirements.
I also wonder if the withdrawal the guidance issuances violates the very Act cited, to wit, the Administrative Procedure Act,[xv] which sets forth procedures for federal agencies in rulemaking, adjudication, and judicial review of agency actions. It ensures procedural regularity and reasoned decision-making in administrative law. The Supreme Court has made clear that “when an agency changes its existing position,” it must “show that there are good reasons for the new policy.”
The CFPB probably did not give good reasons for withdrawing each guidance document because there are none, as far as I can tell. I assume even the current CFPB leadership knows that those documents still largely reflect the best reading of the law.
In fact, current CFPB leadership is ironically corroborating that they know the documents represent the best reading of the law because the CFPB is starting to issue longer statements re-rescinding – if that’s even possible – some of the 67 withdrawn guidance documents.
So, I would be cautious about putting too much stress on the withdrawn issuances. The reasoning in those guidance documents remains available to courts, private litigants, state attorneys general, other federal agencies, and maybe even future incarnations of the CFPB.
Jonathan Foxx, PhD, MBA
Chairman & Managing Director
[i] Promoting
the Rule of Law Through Improved Agency Guidance Documents, Executive Order
13891, 10/9/19, Executive Office of the President, 10/15/19
[ii] Interpretive
Rules, Policy Statements, and Advisory Opinions; Withdrawal, 5/12/25, 90 FR
20084, Consumer Financial Protection Bureau
[iii] Statement
of Policy Regarding Prohibition on Abusive Acts or Practices, 4/12/2023, 88
FR 21883, Consumer Financial Protection Bureau
[iv] Disclosure
of Consumer Complaint Data, 4/10/13, 78 FR 21218, Bureau of Consumer
Financial Protection
[v] Disclosure
of Certain Credit Card Complaint Data, 6/22/12, 77 FR 37558, Consumer
Financial Protection Bureau
[vi]
Industry Letter to Russel Vought, Act Director, Consumer Financial Protection
Bureau, 4/24/25
[vii]
Submit a Complaint about a Financial Product or Service, https://www.cfpb.gov, https://www.consumerfinance.gov/complaint
[viii]
Disclosure of Consumer Complaint Narrative Data, 3/24/15, 80 FR 15572,
Consumer Financial Protection Bureau
[ix] Registry
of Nonbank Covered Persons Subject to Certain Agency and Court Orders, Proposed
Rescission, 5/14/25, 90 FR 20406, Consumer Financial Protection Bureau;
Comment Period ends on 6/13/25
[x] Registry
of Nonbank Covered Persons Subject to Certain Agency and Court Orders,
7/28/24, 89 FR 56028, Consumer Financial Protection Bureau
[xi] Compendium
of Recent CFPB Guidance, January 14, 2025, p.2, Consumer Financial
Protection Bureau
[xii] Loper
Bright Enterprises v. Raimondo, 603 US 369 (2024)
[xiii]
Idem
[xiv] Op. cit. ii
[xv]
Administrative Procdedure Act, 6/11/46, Public Law 404, 79th Congress
