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CFPB Requests Input on TRID and Reverse Mortgage Disclosure Requirements: What Mortgage Industry Participants Need to Know

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On July 9, 2026, the Consumer Financial Protection Bureau (CFPB) published a Request for Information (RFI) seeking public input on potential changes to several mortgage disclosure requirements, including the TILA-RESPA Integrated Disclosure (TRID) rules and reverse mortgage disclosures. The RFI reflects the CFPB’s broader effort to identify regulatory requirements that may increase costs, create operational burdens, or unnecessarily impede access to mortgage credit while continuing to provide meaningful consumer protections. The RFI follows the President’s March 13, 2026, Executive Order (the “March EO”), which directed the CFPB to consider, as appropriate and consistent with applicable law:

(i) proposing amendments to Regulation Z that tailor the following requirements for smaller banks: ATR and QM requirements (including potentially a broader QM safe harbor for portfolio loans) and the requirements of the Truth in Lending Act, Public Law 90-321 (TILA), Real Estate Settlement Procedure[s] Act, Public Law 93-533 (RESPA), and TILA-RESPA Integrated Disclosure (TRID) rules;

(ii) replacing TRID timing rules with a materiality-based standard that preserves consumer clarity and reduces closing delays; [and]

. . . .

(vii) exempting rate-and-term refinancing (including cash-out refinancing) from rescission rights.”

For mortgage lenders, servicers, and reverse mortgage participants, this development may signal the beginning of a new round of regulatory reform in the mortgage disclosure space.

What Happened?

The CFPB issued an RFI requesting comments on whether existing mortgage disclosure requirements should be revised to reduce burdens on industry participants and consumers. The Bureau specifically seeks feedback regarding three areas:

  1. TRID disclosures;
  2. The right of rescission applicable to certain refinance transactions; and
  3. Reverse mortgage disclosures.

The comment period closes on August 10, 2026.

TRID Is Back on the Table

The TRID rules, which became effective in 2015, integrated disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into two primary forms: the Loan Estimate and the Closing Disclosure. The CFPB’s RFI asks whether certain aspects of the current framework create unnecessary burdens for lenders or confusion for consumers. Areas identified for comment include disclosure timing requirements, tolerance rules, electronic delivery requirements, and whether smaller institutions should be subject to different or more tailored requirements.

Although the CFPB has amended TRID several times over the last decade, industry participants have continued to identify operational challenges associated with disclosure redisclosures, timing requirements, cure processes, and technology implementation. The RFI provides stakeholders an opportunity to raise those concerns directly with the Bureau.

Reverse Mortgages Receive Particular Attention

The RFI also focuses on reverse mortgage disclosures, an area where the disclosure regime remains largely separate from the integrated TRID framework.

Unlike most forward mortgage products, reverse mortgages continue to rely on multiple disclosure forms and calculations, including Truth in Lending disclosures, Good Faith Estimates, HUD-1 settlement statements, and the Total Annual Loan Cost (TALC) disclosure. The CFPB is seeking comment on whether these disclosures continue to serve borrowers effectively or whether a more streamlined approach would improve consumer understanding.

Among other topics, the Bureau asks whether:

  • Reverse mortgage borrowers would benefit from a single integrated disclosure framework similar to TRID;
  • TALC calculations remain useful and understandable;
  • Alternative disclosures showing projected loan balance growth in dollar terms would be more meaningful than annualized cost metrics; and
  • Consumers would benefit from reverse mortgage-specific educational materials.

These questions suggest that the CFPB may be considering a significant modernization of reverse mortgage disclosures.

Why Does It Matter?

This RFI could represent the first step toward meaningful changes in mortgage disclosure regulation.

Potential Changes to Longstanding TRID Compliance Requirements

TRID compliance remains one of the most operationally intensive areas of mortgage origination. Loan origination systems, document preparation vendors, settlement service providers, and lenders have invested substantial resources in implementing and maintaining TRID compliance. Even relatively modest regulatory changes could require system modifications, vendor updates, revised procedures, employee training, and quality-control enhancements.

At the same time, many industry participants have argued that certain aspects of the rules create costs without providing corresponding consumer benefits. The CFPB appears interested in identifying those areas and assessing whether simplification is possible.

Reverse Mortgage Reform Could Be Significant

The reverse mortgage portion of the RFI may prove especially noteworthy. Reverse mortgage disclosures are governed by requirements that predate TRID and often present information differently than consumers encounter in forward mortgage transactions. Critics have long questioned whether the TALC disclosure is useful or understandable to borrowers. The CFPB’s willingness to revisit those requirements suggests that the Bureau may be open to a broader redesign of the reverse mortgage disclosure framework.

If the CFPB ultimately pursues a more integrated disclosure model for reverse mortgages, lenders and technology providers may face substantial implementation projects but could also benefit from a more streamlined and consumer-friendly framework.

The RFI May Signal Broader Deregulatory Efforts

The RFI was issued as part of a broader federal initiative—announced in the March EO—focused on promoting access to mortgage credit and evaluating regulations that may increase lending costs. As a result, stakeholders should view this development not simply as a disclosure review, but as part of a potentially larger conversation regarding mortgage regulation, operational burden, and consumer protection.

What Do I Need to Do?

Mortgage industry participants should not assume that regulatory changes are imminent, but they should take the RFI seriously.

Consider Submitting Comments

Lenders, servicers, investors, settlement service providers, and technology vendors should evaluate whether they have operational experience or data that could inform the CFPB’s review. The most persuasive comments will typically identify specific compliance burdens, quantify costs where possible, and propose practical alternatives that preserve consumer protections.

Identify TRID Pain Points

Organizations should take inventory of recurring compliance challenges, including: disclosure timing issues; redisclosure triggers; tolerance cure processes; electronic delivery requirements; secondary market impacts; and vendor and system implementation costs.

These issues may become particularly relevant if the CFPB moves beyond the information-gathering stage and begins considering proposed rule changes.

Reverse Mortgage Participants Should Engage Early

Reverse mortgage lenders, investors, and servicers should pay particular attention to the CFPB’s questions regarding TALC disclosures, integrated disclosure concepts, and consumer education. Stakeholders with direct experience observing borrower confusion—or disclosure practices that work particularly well—may have a meaningful opportunity to influence future policy.

Monitor for Next Steps

The RFI is only the beginning of the process. Following the comment period, the CFPB may decide to take no action, issue additional guidance, propose targeted amendments, or pursue broader rulemaking initiatives. Stakeholders should continue monitoring developments closely, particularly given the potential implications for mortgage origination systems, disclosure platforms, and compliance management programs.

For now, the message is clear: after more than a decade of living with TRID—and decades of operating under the current reverse mortgage disclosure framework—the CFPB is actively considering whether these requirements should be modernized. Industry participants have a limited window to help shape what comes next.

Illinois Enacts Comprehensive Buy-Now-Pay-Later Law: Implications for Licensing, Bank Partnerships, and Program Structure

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What Happened?

On June 25, 2026, Illinois enacted Senate Bill 3561, which establishes the Buy-Now-Pay-Later Loan Consumer Protection Act. The measure creates a new state-level licensing and regulatory framework governing certain buy-now-pay-later (“BNPL”) products offered to Illinois consumers.

The Act applies to closed-end consumer credit products offered in connection with a specific purchase of goods or services where the credit is either (i) payable in four or fewer installments or (ii) has a term of 120 days or less. The definition expressly includes both interest-free “pay-in-four” products and BNPL products that carry interest or finance charges.

With this legislation, Illinois joins a growing number of states seeking to impose a tailored regulatory framework on BNPL products. The law is effective immediately, although it includes a transitional compliance period for existing market participants.

Overview of the Act

At a high level, the Act:

  • Requires licensure for persons engaged in the business of offering BNPL loans in the state
  • Establishes a regulatory regime administered by the Illinois Department of Financial and Professional Regulation
  • Imposes consumer protection, underwriting, reporting, and examination requirements
  • Applies broadly to a wide range of market participants involved in BNPL programs
  • Provides that violations constitute an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act

The Act also provides that BNPL loans made in compliance with its requirements are not subject to certain existing Illinois lending statutes, including the Consumer Installment Loan Act and the Payday Loan Reform Act.

Scope of Coverage: Broad and Functional

A defining feature of the Illinois law is its expansive approach to coverage. The Act applies not only to entities that directly originate BNPL loans, but also to persons that:

  • Arrange or broker loans
  • Acquire or hold whole or partial interests in loans
  • Act as agents or service providers in connection with BNPL programs

In addition, the Act includes anti-evasion language intended to capture transactions that are “in substance” loans or structured to avoid application of the statute.

This framing reflects a broader trend in state legislation focusing on functional activity and economic substance, rather than formal labels or contractual roles.

Merchant and Passive Investor Carve-Outs

The Act includes several notable exceptions:

  • Merchant platform exception: A merchant or platform is not covered solely by offering BNPL options to consumers, provided it does not originate, underwrite, service, or hold an ownership interest in the underlying loans.
  • Passive investor exception: Persons holding a partial interest in a BNPL loan as a passive investor are excluded, so long as they do not control origination or servicing functions.

These carve-outs are consistent with approaches seen in other recent legislation, but their practical scope will depend on how regulators interpret concepts such as “control” and “participation” in the lending program.

Bank Partnership and “True Lender” Considerations

Although the Act exempts banks, credit unions, and certain other depository institutions, it does not automatically exempt nonbank participants in bank-partner BNPL programs.

Instead, the statute’s broad applicability provisions—combined with its anti-evasion framework—suggest that Illinois regulators may evaluate BNPL programs based on economic interest and operational control, rather than the nominal identity of the originating lender.

As a result, fintech companies and other nonbank program participants should consider how their roles—particularly in marketing, underwriting, funding arrangements, and servicing—may be viewed under the Act.

Underwriting and Consumer Protections

The Act introduces a set of consumer protection requirements that align BNPL products more closely with traditional consumer lending obligations.

Among other things, the law:

  • Requires disclosure of loan terms, costs, and repayment structure
  • Mandates processes for handling consumer disputes and refunds
  • Imposes an expectation that lenders assess a borrower’s ability to repay prior to extending credit

While the statute does not prescribe a specific underwriting formula, it signals a shift toward ability-to-repay–type standards in the BNPL context.

Transition Period and Implementation Timeline

The Act provides a transition pathway for existing BNPL providers.

Specifically, a person that was offering BNPL products in Illinois prior to January 1, 2028, and submits a license application by that date, may continue operating while the application is pending.

Key Takeaways

The Illinois BNPL Act raises several important considerations for market participants:

  1. Licensing analysis will be broader than traditional lender-focused regimes. Entities involved in program structure, marketing, servicing, or funding should assess whether they fall within scope.
  2. Form will not control over substance. The Act’s anti-evasion provisions suggest regulators will look beyond contractual labels to determine who is effectively acting as the lender.
  3. Bank partnership structures may be subject to scrutiny. Nonbank participants should evaluate their role in underwriting, economic exposure, and program governance.
  4. Merchant and investor carve-outs are helpful—but limited. These exclusions depend heavily on the absence of operational control or program-level influence.
  5. Compliance will extend beyond licensing. The Act introduces substantive obligations around disclosures, underwriting, dispute resolution, and regulatory oversight.

Looking Ahead

Illinois’s enactment of a comprehensive BNPL framework reflects an accelerating trend toward state-level regulation of point-of-sale financing products.

As additional states consider similar legislation, market participants should expect continued divergence in regulatory requirements—and a growing need to align program structures with evolving expectations around licensing, consumer protection, and risk management.

Vermont Enacted HB 648 that Imposes Licensing, Disclosure and Certain Restrictions on Sales-Based Financing and Factoring Transactions

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What Happened?

On June 16, 2026, Vermont enacted HB 648 that imposes licensing, disclosure and certain restrictions on sales-based financing and factoring transactions. The bill incorporates certain notable provisions from Texas HB 700, which was enacted on May 29, 2025, including an ACH debit ban and confession-of-judgment prohibition. The law takes effect on July 1, 2027.

Why Does It Matter?

Notably, the Vermont law applies to both sales‑based financing (e.g., merchant cash advances, revenue‑based financing) as well as factoring / receivables purchase transactions, and covers both providers (funders) and brokers. The law requires providers of sales-based financing and/or factoring to obtain a Vermont Lender license and persons who solicit prospective recipients of sales-based financing and/or factoring to obtain a Vermont loan solicitation license. The Vermont law requires providers to disclose the amount of financing, the APR, the total cost of capital, the repayment terms / method and other material pricing and structural terms. Similar to Texas HB 700, the law prohibits sales-based financing and factoring providers from automatically debiting a recipient’s deposit account unless the provider holds a validly perfected, first-priority security interest in the recipient’s account. The law includes salient restrictive provisions such as prohibitions on confessions of judgment and similar provisions in any factoring or sales-based financing contracts and requires that contracts must be governed exclusively by Vermont law. Further, the law mandates that all disputes be brought in Vermont courts, and that if arbitration is necessary, face-to-face proceedings cannot occur outside Vermont.

The Vermont law does not apply to banks and other depository institutions, sellers of goods or services that finance the sale of goods or services, and transactions of $1,000,000 or more that are not primarily for personal, family, or household use.

What to Do Now

Vermont joins eleven states that require providers of certain types of commercial financing to disclose key terms to small businesses and other covered entities before a transaction is consummated. The new Vermont law is notable because it requires providers and brokers to obtain licenses, not the more ministerial registrations mandated by the state statues adopted in Texas, Utah and Virginia, and it covers both sales-based financing and factoring transactions. The Vermont prohibitions against debiting a recipient’s deposit account and requirement to litigate in Vermont courts are especially burdensome if not impractical. It is a certainty that other states will enact similar types of laws regulating commercial financing arrangements.

The California Financial Protection Bureau? California Moves to Fill the CFPB Void

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What Happened?

On May 12, 2026, California Governor Gavin Newsom announced the appointment of former Consumer Financial Protection Bureau (“CFPB”) Director Rohit Chopra as Secretary of the newly created California Business and Consumer Services Agency (“BCSA”).

The BCSA is a cabinet-level reorganization that will officially launch on July 1, 2026, consolidating a wide range of licensing, regulatory, and enforcement functions across numerous consumer-facing sectors of the California economy. These include oversight bodies such as the Department of Financial Protection and Innovation (“DFPI”), Department of Consumer Affairs, and other key regulators impacting financial services, real estate, and technology markets.

Governor Newsom framed the move explicitly as a response to the federal government’s retrenchment in consumer financial protection under the Trump administration, positioning California to “strengthen the state’s efforts to protect consumers and honest businesses” as federal enforcement is scaled back.

Chopra, who previously led the CFPB and served as a Federal Trade Commission commissioner, is widely known for aggressive enforcement initiatives targeting “junk fees,” repeat offenders, and unfair or abusive practices in consumer finance.

Why Does It Matter?

The creation of the BCSA—and the selection of Chopra to lead it signals a deliberate effort by California to function as a state-level analogue to a weakened CFPB. As federal consumer protection oversight contracts, California is positioning itself to step into the resulting regulatory vacuum.

This mirrors broader state-level trends, where states are expanding their authority and enforcement posture to address unfair, deceptive, and abusive acts and practices (“UDAAP”) in the absence of robust federal oversight. For example, as we have noted in prior posts, New York has moved to modernize its UDAAP framework in anticipation of increased enforcement and oversight of the financial services industry. California now appears poised to follow a similar path, albeit through a different structural approach.

Unlike a single regulator the BCSA is structured as a coordinating “umbrella” agency that brings together dozens of previously fragmented entities. This consolidation is designed to align enforcement priorities, streamline supervision, and enable coordinated rulemaking across industries that increasingly intersect (e.g., fintech, payments, and digital platforms).

For financial services companies, the most significant implication is the integration of the DFPI into a broader enforcement framework. The DFPI already exercises expansive authority over mortgage banking and finance lending activities and, under the California Consumer Financial Protection Law (“CCFPL”), supervises a broad spectrum of nonbank financial products, including lending, payments, and emerging fintech offerings. The new structure allows California to pursue cross-sector enforcement strategies, particularly where financial products intersect with technology platforms, data practices, or broader consumer marketplaces.

Chopra’s appointment strongly suggests that California enforcement will reflect the priorities and philosophy that characterized his tenure at the CFPB. During that time, the Bureau emphasized:

  • Aggressive enforcement against “junk fees” and pricing practices;
  • Scrutiny of repeat offenders and systemic compliance failures;
  • Focus on unfairness and abusiveness theories, not just deception; and
  • Increased attention to digital platforms, data usage, and algorithmic decision-making.

Expect these same themes to shape California’s enforcement agenda, with a particular emphasis on identifying “pattern and practice” violations affecting broad segments of consumers, rather than isolated compliance issues.

What Do You Need to Do?

In light of California’s evolving regulatory posture, financial services companies should take proactive steps to reassess their compliance frameworks with an eye toward increased state-level scrutiny.

First, companies should assume that CFPB-style UDAAP standards will remain highly relevant and ensure that policies and controls are calibrated to address unfair and abusive practices, not just deception.

Second, institutions should evaluate their operations holistically, recognizing that California regulators may take a “full lifecycle” view of consumer interactions. This includes:

  • Product design and pricing;
  • Marketing and disclosures;
  • Servicing and communications; and
  • Complaint handling and remediation practices.

Third, companies should prepare for greater inter-agency coordination within California, which may lead to:

  • More complex and multi-dimensional investigations; and
  • Parallel scrutiny across licensing, conduct, and consumer protection regimes.

Finally, organizations should closely monitor developments from the BCSA and its component agencies, particularly the DFPI, as enforcement priorities and rulemaking agendas begin to take shape under Chopra’s leadership.

Maryland Update: Legislature Clarifies Licensing Treatment for Passive Trusts and Loan Assignees Through SB 784

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What Happened?

In April 2026, Maryland Governor Wes Moore signed Senate Bill 784 (Chapter 40 of the Laws of 2026), a measure addressing the application of licensing requirements under the Maryland Financial Institutions Article. SB 784 repeals Section 11‑102, a provision addressing whether entities that acquire or are assigned mortgages, mortgage loans, or installment loans are subject to Maryland consumer credit licensing requirements.

The General Assembly expressly characterized SB 784 as a “clarifying corrective measure” intended to repeal a provision of law that was “erroneously enacted” in 2025. The bill takes effect July 1, 2026.

SB 784 follows a period of uncertainty triggered by the Maryland Appellate Court’s 2024 decision in Estate of H. Gregory Brown v. Carrie M. Ward, et al., No. 1009 (App. Ct. Sept. Term 2023), and the Legislature’s subsequent emergency response through the Maryland Secondary Market Stability Act of 2025.

As we previously discussed, in Brown, the court concluded that a statutory trust holding a defaulted HELOC was required to be licensed before proceeding to foreclosure. Following that decision, the Maryland Office of Financial Regulation issued guidance suggesting that assignees of certain Maryland loans—including trusts—could be subject to licensing requirements.

The 2025 Legislative Response

In April 2025, Governor Moore signed the Maryland Secondary Market Stability Act of 2025 (HB 1516 and its companion SB 1026) with an immediate effective date. We covered that legislation and its regulatory impact in detail here.

As enacted, HB 1516 was intended to be the controlling law. It took a targeted approach by:

  • Defining and expressly exempting “passive trusts” from Maryland mortgage lender licensing requirements; and
  • Making conforming amendments to ensure that securitization and similar trust vehicles that acquire Maryland mortgage loans—but do not originate or service them—would not be required to obtain licenses.

Although similar language appeared in SB 1026 adding new Section 11‑102, market participants and regulators generally treated HB 1516 as reflecting the Legislature’s operative intent. SB 784 confirms that understanding.

What SB 784 Does—and Does Not Do

SB 784 repeals Section 11‑102 and states expressly that the provision was erroneously enacted. Importantly, SB 784 does not disturb the passive trust exemption adopted in 2025. The definition of “passive trust” and the express exemption for such trusts remain part of Maryland law.

In practical terms, SB 784 eliminates a stand‑alone statutory provision that could be read to create a broad exemption for all loan assignees, while preserving the narrower exemption the General Assembly intended to adopt in 2025.

Current State of Maryland Law

Following SB 784:

  • Passive trusts—as defined in the Maryland Mortgage Lender Law—remain exempt from Maryland mortgage lender licensing requirements.
  • Other entities that acquire or hold loans do not appear to require licensure solely by virtue of assignment, consistent with historical practice and legislative intent, provided they are not otherwise engaged in lending or servicing activity.
  • The analysis remains fact‑specific, and licensing exposure will continue to depend on an entity’s role in the credit lifecycle.

Although the Legislature has now clarified its intent, the area remains somewhat unsettled and could be subject to further judicial or regulatory scrutiny, particularly given the reasoning in Brown and the possibility of future challenges.

Why Does It Matter?

SB 784 provides welcome clarity for securitization sponsors, trustees, and other secondary‑market participants holding Maryland loan assets. By confirming that Section 11‑102 was a drafting error, the Legislature has reduced the risk that passive trust structures will again be drawn into licensing disputes based on technical anomalies.

At the same time, SB 784 underscores that Maryland has not adopted a blanket statutory exemption for all assignees. Licensing risk remains tied to actual conduct, not merely loan ownership.

What Do I Need to Do?

Companies that acquire or hold Maryland mortgage or consumer loan assets should:

  • Confirm whether their structures qualify as passive trusts under Maryland law;
  • Review servicing and operational arrangements to ensure borrower‑facing activity is conducted by appropriately licensed entities;
  • Monitor ongoing developments, including any additional guidance from the Office of Financial Regulation or future litigation interpreting Brown in light of the Legislature’s corrective actions; and
  • Reassess licensing strategies adopted during the 2024–2025 period of uncertainty.

Alston & Bird’s Consumer Financial Services Team continues to monitor these developments and can assist with licensing analysis, transaction structuring, and risk assessments related to secondary‑market and servicing activity in Maryland.