There’s been a lot of buzz lately about changes at the Consumer Financial Protection Bureau (CFPB)—and some confusion too. Since the CFPB was created after the financial crisis, it has shaped many of the rules around loan origination that we follow today. But a few weeks ago, the administration essentially instructed the CFPB to halt its enforcement activities.
In this newsletter, I’ll break down what’s happening and how it affects note originators like us.
Misconceptions About CFPB Changes
Some investors mistakenly believe that the CFPB’s inactivity means compliance rules no longer apply and that we’re heading for a wild west of predatory lending. That’s simply not true. Investors who operate under that assumption will eventually get a visit from their state Attorney General—and it won’t be a pleasant one.
What’s Likely to Happen Next
My take? We’ll likely see fewer frivolous enforcement actions that create unnecessary friction for businesses without providing real benefits to consumers. That’s a positive development. However, it’s important to remember that while the CFPB establishes the rules, enforcement has historically happened at the state level—and that hasn’t changed.
If you review the CFPB’s list of enforcement actions, you’ll notice they’ve targeted large institutions like American Honda Finance and Capital One, not individual investors or mom-and-pop lenders. Interestingly, enforcement actions seem to have completely stopped as of January 30 (https://www.consumerfinance.gov/enforcement/actions/). But many state Attorneys General are stepping in to try to keep the CFPB operational.(https://ag.ny.gov/press-release/2025/attorney-general-james-…)
What This Means for Note Originators
Bottom line: The rules for loan originations haven’t changed. The requirements for creating a loan on an owner-occupied property remain the same. You still need to:
✅ Validate that the borrower has the ability to repay the loan.
✅ Understand the credit worthiness of the borrower
✅ Send out the required disclosures on time.
Compliance Is Easier Than You Think
Having spent a lot of time deep-diving into compliance rules and reviewing cases where lenders ran into trouble, I can confidently say that staying compliant is straightforward once you have the right systems in place. In fact, most of these rules reinforce practices that smart lenders should be following anyway—like properly underwriting borrowers to ensure solid, well-structured loans.
As always, staying informed and compliant is the best way to protect your investments. If you have any questions or want to discuss how to ensure your origination practices stay airtight, feel free to reach out!