Alston & Bird Consumer Finance Blog

Consumer Financial Protection Bureau (CFPB)

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.

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.

CFPB Rescinds Registry for Covered Nonbank Entities

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What Happened?

In the October 29 Federal Register, the Consumer Financial Protection Bureau issued a final rule rescinding its previous rule relating to the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders Final Rule, which imposed obligations on nonbank entities that offer or provide a consumer financial product or service. As a result, covered nonbanks will no longer be required to registered with the Bureau or provide information about certain public Federal, State, or local written orders imposing obligations on the nonbank based on violations of certain consumer protection laws (among other obligations we discussed in a previous post).

In the same Federal Register issue, the Bureau also issued notice of its intent to rescind: (a) amendments to its rules of practice governing adjudication proceedings; and (b) a proposed rule regarding the registry of supervised nonbanks that use form contracts to impose terms and conditions that seek to waive or limit consumer legal protections.

DEI in Lending: Are Special Purpose Credit Programs About to DIE?

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For the last several years, federal agencies, including the Consumer Financial Protection Bureau (“CFPB”), have been strongly encouraging financial institutions to implement and offer targeted credit assistance to historically underserved communities as one way to remedy the effects of redlining. Not surprisingly, in accordance with the prior Administration’s Combatting Redlining Initiative, every one of the 16 settlements by the CFPB and the U.S. Department of Justice (“DOJ”) against both bank and non-bank lenders have mandated that these lenders offer targeted credit assistance based on the race or ethnicity of the borrowers or the predominant race or ethnicity of their neighborhoods. To satisfy the terms of these settlements, the lenders often work with state and local agencies to help market and administer their targeted loan subsidies to eligible borrowers based on protected characteristics. And still more redlining cases, brought by fair housing organizations that receive funding through the U.S. Department of Housing and Urban Development (“HUD”) Private Enforcement Initiative (“PEI”), have been resolved via partnerships with federal- and state-funded entities to provide preferential treatment to Black and Hispanic borrowers and neighborhoods. However, given the current Administration’s stated goal of abolishing preferential treatment in favor of “colorblind equality,” it seems that preferential treatment in lending – even where beneficial to underserved and historically redlined communities – is on the chopping block.

DEI in the Current Political Climate

Only a couple of weeks into the new Administration, the message is clear: diversity, equity, and inclusion (“DEI”) initiatives are out. On January 22, 2025, President Trump signed an Executive Order terminating DEI initiatives in the federal workforce and in federal contracting and spending. Specifically, the Executive Order directs all departments and agencies to take strong action to end private sector “DEI discrimination,” including civil compliance investigations, and requires the Attorney General and the Secretary of Education to issue joint guidance regarding the measures and practices required to comply with the U.S. Supreme Court’s June 2023 decision in Students for Fair Admissions v. Harvard. As a reminder, the Supreme Court’s decision in Harvard effectively ended race-conscious admission programs at colleges and universities across the country.

Shortly after the President’s Executive Order, on January 31, 2025, Texas governor Greg Abbott issued his own Executive Order directing all Texas state agencies to eliminate any forms of DEI policies and to treat all people equally regardless of race. In particular, the Executive Oder requires all state agencies to comply with a “color-blind guarantee,” including by ensuring that “all agency rules, policies, employment practices, communications, curricula, use of state funds, awarding of government benefits, and all other official actions treat people equally, regardless of race.” Similarly, West Virginia governor Patrick Morrisey issued his own Executive Order prohibiting DEI efforts by any entity receiving state resources, and there are likely more of such state executive actions to come.

Are SPCPs a form of DEI?

The above federal and state executive actions cast significant doubt on the current legality and permissibility of special purpose credit programs (“SPCPs”), which have been recognized for years as an exception to the Equal Credit Opportunity Act (“ECOA”) prohibition on differential treatment in lending. SPCPs, by definition, provide credit assistance to borrowers via some preferential treatment, often on the basis of borrower race or ethnicity or the predominant race or ethnicity of the residents in the neighborhood. While there may be no agreed-upon definition of DEI, it is safe to say that a SPCP that provides credit assistance, or more favorable credit terms, to borrowers based on race or ethnicity is a form of DEI.

To that end, where the requirement for a lender to implement a SPCP is baked into the terms of a settlement with a federal government agency, and such agency conducts ongoing monitoring of the lender’s activities to ensure the SPCP is being properly carried out, one could argue that the government is effectively mandating differential treatment based on race or ethnicity – in violation of the new DEI prohibition. The same could be said where state agencies and non-profit organizations that receive federal and state funds assist lenders in marketing and administering their SPCPs. Even the HUD-funded Fair Housing Initiatives Program, which includes the PEI program, could be problematic from a White House perspective, given that federal and/or state funds are currently being spent on furthering alleged redlining remediation through differential treatment.

It is even possible that SPCPs offered voluntarily and proactively by lenders may be scrutinized, particularly if the lender receives any government funding or grants. Currently, both Fannie Mae and Freddie Mac offer SPCPs where borrowers receive down payment or closing cost assistance grants from both the government-sponsored enterprise (“GSE”) and the lender. It is unclear whether such GSE programs would fall within the scope of the President’s Executive Order.

Other Uses of DEI in Lending

Setting aside SPCPs, which are often imposed on lenders by the government as a way to remediate alleged redlining, federal and state agencies essentially expect lenders to engage in race-based action and differential treatment in an effort to manage fair lending risk. Indeed, when assessing whether a lender may have engaged in redlining against a particular racial or ethnic group, the CFPB and DOJ, as a matter of course, employ quota-based metrics to evaluate the “rates” or “percentages” of a lender’s activity in majority-minority geographic areas. These federal agencies also consider a lender’s failure to specifically target neighborhoods based on race or ethnicity to be evidence of potential redlining. In other words, the government’s approach to date has not been “colorblind.” It will be interesting to see whether the agencies’ approach to redlining cases will change as a result of this shift away from DEI.

Takeaways for Lenders

Lenders that offer their own SPCPs or participate in GSE SPCPs should ensure that their written plans continue to meet the requirements of Regulation B, which implements ECOA. As always, the justifications for lending decisions that could disproportionately affect consumers based on their race, ethnicity, or other protected characteristic should be well documented and justified by legitimate business needs.

More importantly, lenders that are worried about their fair lending compliance or are subject to a government inquiry for potential redlining should consult with counsel regarding the best approach for presenting evidence of their minority-area lending. These lenders also should strongly consider whether a government-mandated SPCP is the best way forward. While an SPCP, such as loan subsidies or other pricing or underwriting flexibilities may benefit underserved communities and likely expedite settlement of an enforcement matter, the risk of running afoul of DEI prohibitions is not immaterial.