Mortgage Banking Update - May 29, 2025

May 29 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, we discuss Congress' bipartisan bill for federal paid family leave funding for states, look at New York's new legislation on BNPL licensing requirements and consumer protections, cover recent happenings at the CFPB, and much more.

• Ballard Spahr's Consumer Finance Monitor Podcast Ranks in Top 25 in Million Podcasts' Top 25 Among Hundreds of Financial Services Podcasts
• Podcast Episode: Navigating State AG Investigations – A Playbook for Financial Services Companies
• CFPB Proposes to Rescind Rule Requiring Nonbanks to Register Certain Agency Enforcement and Court Orders
• CFPB Rescinds 67 Guidance Documents
• Budget Bill Would Cut CFPB Funding
• CFPB Won't Make Small Business Reporting Rule a Priority
• Coalition for a Democratic Workplace Urges U.S. Attorney General to Unilaterally Override Biden-Era NLRB Decisions
• Trigger Leads – Don't Forget About the States
• DOJ Lawyers, National Treasury Employees Union Attorney Square Off in Appeals Court Over CFPB Firings
• Congress Introduces Bipartisan Bill to Provide Federal Paid Family Leave Funding for States
• New York Governor Hochul Signs Legislation That Includes BNPL Licensing Requirements and Other Consumer Protection Provisions
• Looking Ahead

Ballard Spahr's Consumer Finance Monitor Podcast Ranks in Top 25 in Million Podcasts' Top 25 Among Hundreds of Financial Services Podcasts

We are very proud to report that podcast database service Million Podcasts has ranked Ballard Spahr's Consumer Finance Monitor podcast in the top 25 among hundreds of financial services podcasts nationally. The service recently published a list of the top 100 financial services podcasts.

Consumer Finance Monitor also ranks as the top law firm podcast among the top 100 financial services podcasts, as well as the only one focused on consumer financial services. Million Podcasts ranks podcasts across industries based on key factors, such as review count and ratings, topic relevancy, consistency of fresh episodes, and total number of episodes. For its rankings, Million Podcasts leverages its extensive database of more than 2.5 million podcasts from various industries.

Consumer Finance Monitor is produced by Ballard Spahr's industry-leading Consumer Financial Services Group. The weekly podcast show, launched in September 2017, along with Ballard Spahr's Consumer Finance Monitor blog, launched in July 2011, offers unparalleled coverage of the consumer finance issues that matter most to the industry, from new product development and emerging technologies to regulatory compliance and enforcement to the ramifications of private litigation. Consumer Finance Monitor helps financial services providers avoid risk, capitalize on opportunities, and make sense of breaking developments—which have been numerous under the Trump administration transition.

The Consumer Finance Monitor podcast is hosted by Alan S. Kaplinsky, senior counsel and former practice group leader for 25 years of the Consumer Financial Services Group. Alan is the recipient of the Lifetime Achievement Award of the American College of Consumer Financial Services Lawyers. The podcast show regularly features as guests luminaries in the consumer financial services world, including academia, government, private practice, and consumer advocates.

To stay apprised of all the latest new and insights, subscribe to the Consumer Finance Monitor blog and to the Consumer Finance Monitor podcast on your favorite platform.

Ballard Spahr's Consumer Financial Services Group represents traditional and nontraditional financial services providers, from the largest financial institutions to smaller enterprises and internet-based providers. The Group's attorneys advise on regulatory matters, assist in the design and documentation of credit products, and represent clients in class actions, government regulatory enforcement proceedings, and other lawsuits nationwide.

For media inquiries, please contact Bill Shralow at 215.864.8195.

Consumer Financial Services Group

Podcast Episode: Navigating State AG Investigations – A Playbook for Financial Services Companies

This podcast show is a repurposed webinar that we produced on April 22, titled "Navigating State AG Investigations: A Playbook for Financial Services Companies." State Attorneys General (AG) investigations can present significant challenges for businesses and legal practitioners. We offer a detailed dive into effective strategies and practical tips drawn from our State AG Investigation Playbook. Our speakers, Mike Kilgarriff, Joseph Schuster, and Jenny Perkins from our Consumer Financial Services Group, Adrian King, Jr. from our Government Affairs and Public Policy Group, and Hank Hockeimer from our White Collar Defense and Investigations Group, will guide you through the key aspects of handling these investigations, from initial inquiry to resolution.

Key topics include:

• Understanding the scope and authority of state AGs
• Compliance readiness - preparing for state AG scrutiny before it starts
• Best practices for responding to state AG inquiries
• Coordination with federal regulators
• Strategies for negotiating settlements and resolutions
• Managing public relations and media during an investigation
• Case studies illustrating successful outcomes

Senior Counsel and Former Practice Group Leader for 25 years, Alan Kaplinsky, of the Consumer Financial Services Group hosts the podcast show.

To listen to this episode, click To listen to this episode, click here.

Consumer Financial Services Group

CFPB Proposes to Rescind Rule Requiring Nonbanks to Register Certain Agency Enforcement and Court Orders

The CFPB is proposing to rescind its rule that requires certain nonbank entities to register covered agency enforcement and court orders.

Specifically, the rule applies to any supervised or nonsupervised nonbank that engages in offering or providing consumer financial products or services and any of its service provider affiliates, unless excluded.

The rule requires that covered entities register with the CFPB if they are, or become, subject to certain types of orders from local, state, or federal agencies or courts involving consumer protection law violations.

When it was issued during the Biden administration, the CFPB said the rule would help deter violations of consumer protection laws. The CFPB also said it would help the bureau, law enforcement, and the public limit harms from repeat offenders.

"Having access to a centralized list of all relevant orders entered against nonbanks would significantly increase the Bureau's ability to monitor the market so that the Bureau can identify, better understand, and ultimately, prevent further consumer harm, particularly from repeat offenders," the Bureau said, at the time.

The CFPB adopted the rule despite opposition from, and concerns raised by, the Small Business Administration's Office of Advocacy and various state regulator associations, including the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators.

Significantly, the three-sentence provision in Dodd-Frank authorizing the CFPB to adopt registration requirements provides that in "developing and implementing registration requirements under this paragraph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate."

The bare bones nature of the Dodd-Frank registration provision, and opposition to the adoption of the registry rule by state regulators, raise significant questions regarding whether a court would find the rule to be consistent with Dodd-Frank.

The Trump administration's CFPB said the rule is not necessary.

"The Bureau is proposing to rescind the NBR Rule based upon concern that the costs the rule imposes on regulated entities, and which may in large part be passed onto consumers, are not justified by the speculative and unquantified benefits to consumers discussed in the analysis proffered in the NBR Rule," the CFPB said, in proposing the rescission.

The Bureau added that "the NBR Rule is not necessary as a tool to effectively monitor and reduce potential risks to consumers from bad actors as Congress has authorized multiple other Federal and State agencies to enforce Federal consumer financial laws."

The CSBS has called for rescinding the rule. In a letter to Acting CFPB Director Russell Vought, CSBS President and CEO Brandon Milhorn wrote that state regulators in 2010 established a fully searchable website that allows consumers to view company information and regulatory orders for state-licensed nonbanks.

"The Nonbank Registry is therefore unnecessary, duplicative of existing resources available to consumers, and a waste of federal funds," he wrote.

In addition, he wrote that the CFPB did not consider the costs of the regulations on small entities. As a result, Milhorn wrote, the CFPB's estimates of the cost of the rule were "unrealistically low."

He also said that the nonbank registry is an infringement on the basic tenets of federalism. "Monitoring for, and reporting on, compliance with orders based on state law is exclusively the authority and responsibility of states, not the federal government," he wrote. "Congress did not give the CFPB any authority over state and local consumer financial laws."

Comments on the proposed rescission of the rule are due on or before June 13, 2025.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

CFPB Rescinds 67 Guidance Documents

Contending that policies implemented by guidance represent an unfair regulatory burden and might be contrary to federal law, the CFPB is rescinding 67 guidance documents issued since the Bureau began operating in 2011.

"In many instances, this guidance has adopted interpretations that are inconsistent with the statutory text and impose compliance burdens on regulated parties outside of the strictures of notice-and-comment rulemaking," Acting CFPB Director Russell Vought said, in announcing the policy changes.

He continued, "But even where the guidance might advance a permissible interpretation of the relevant statute or regulation, or afforded the public an opportunity to weigh in, it is the Bureau's current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased."

And he said that the Bureau has determined that the benefits of the new policy outweighs the cost to any purported reliance interests.

The guidance documents being rescinded fall into four categories: Policy statements, interpretive rules, advisory opinions, and other guidance (primarily circulars and bulletins).

As background, Vought said that during his first term, President Trump issued an executive order directing agencies not to use guidance documents to create new binding rights or obligations. Instead, agencies should impose legally binding obligations on the public only through regulations "and only after appropriate process, except as authorized by law or as incorporated into a contract."

Vought added, that although the executive order was rescinded by the Biden administration, "the principles it expressed are required by laws such as the Administrative Procedure Act and are no less salient today."

Vought said he issued a memorandum on April 11, 2025, prohibiting the use of guidance documents and a separate memorandum instructing all CFPB staff to review all guidance the Bureau had issued since its inception.

Vought further outlined the new policy and the reasons for it:

• The CFPB is committed to issuing guidance only when that guidance is necessary and would reduce compliance burdens rather than increase them. "Historically, the Bureau has released guidance without adequate regard for whether it would increase or decrease compliance burdens and costs," he wrote. "Our policy has changed."
• The Bureau is committed to reducing its enforcement activities in conformance with President Trump's directive to deregulate and streamline bureaucracy. Many of the CFPB's enforcement responsibilities overlap or duplicate other state and federal regulatory efforts, he noted.
• The Bureau does not believe that any reliance interests compel retention of these guidance documents. Vought pointed out that parties understand that guidance is generally nonbinding... "Finally, to the extent guidance materials or portions thereof go beyond the relevant statute or regulation, they are unlawful, undermining any reliance interest in retaining that guidance" he said.

There is one important caveat to the CFPB's actions here. The Bureau has cautioned that it intends to continue reviewing these guidance documents. As a result, the possibility exists that at least some, although probably not all, may ultimately be reinstated in some fashion. In the meantime, the Bureau has determined that the guidance documents should not be enforced or otherwise relied upon by the Bureau while that review is ongoing.

An interesting aspect is that the CFPB rescinded a circular addressing UDAAP concerns with digital platforms involving nonmortgage consumer financial products and services, but did not rescind an advisory opinion addressing similar UDAAP concerns, as well as Real Estate Settlement Procedures Act (RESPA) section 8 concerns, with digital platforms involving mortgage products.

Specifically, in February 2023 the CFPB issued an advisory opinion titled "Real Estate Settlement Procedures Act (Regulation X); Digital Mortgage Comparison-Shopping Platforms and Related Payments to Operators". The CFPB issued the advisory opinion "to address the applicability of [RESPA] section 8 to operators of certain digital technology platforms that enable consumers to comparison shop for mortgages and other real estate settlement services, including platforms that generate potential leads for the platform participants through consumers' interaction with the platform (Digital Mortgage Comparison-Shopping Platforms)." While the CFPB mainly addresses RESPA, it appeared that UDAAP concerns are a significant motivating force behind the issuance of the advisory opinion.

The UDAAP concern aspect was confirmed when in February 2024 the CFPB issued Consumer Financial Protection Circular 2024-01, titled "Preferencing and Steering Practices by Digital Intermediaries for Consumer Financial Products or Services." The circular raises concerns similar to the UDAAP concerns addressed in the advisory opinion, but does not address RESPA as it involves nonmortgage consumer financial products and services.

The rescission of the circular involving nonmortgage consumer financial products and services, and not the similar advisory opinion involving mortgage products, may reflect the intent of the CFPB, as announced in April 2025 to make mortgages the highest priority category of consumer financial products and services for consumer protection efforts.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

Budget Bill Would Cut CFPB Funding

The huge FY26 budget reconciliation bill, H.R. 1, dubbed the "One Big Beautiful Bill Act," contains provisions that would slash CFPB spending.

"We put a firm cap on the Consumer Financial Protection Bureau's budget, setting its funding at no more than $249 million for 2025, with an annual adjustment for inflation going forward," House Financial Services Committee Chairman Representative French Hill, (R-Ark.), told the House Rules Committee before the committee approved a rule for floor debate of the measure.

By comparison, as of September. 30, 2024, the CFPB had incurred about $755.1 million in FY 24 obligations, according to a Bureau report. Of that total, about $480 million was spent on employee compensation and benefits for the 1,755 Bureau employees who were on board at the end of the quarter.

The CFPB currently is funded by the Federal Reserve Board from the combined earnings of the Federal Reserve System. The agency currently may draw 12 percent of the Fed's 2009 operating budget.

The Trump administration has proposed eliminating more than 1,400 employees at the agency, leaving about 200 workers. That plan has temporarily been blocked by the Court of Appeals for the District of Columbia Circuit.

The House passed the reconciliation bill mostly along party lines, 215-214, with one Republican member voting "present".

The reconciliation legislation bundled budget-cutting proposals approved by House authorizing committees with tax proposals from the House Ways and Means Committee.

Among other financial services provisions, the bill would require the CFPB to transfer to the Treasury Department's general fund any amounts remaining in its Civil Penalty Fund, from a civil penalty it imposed, after all direct victims have been compensated.

As Republicans were piecing together the massive reconciliation bill, the Financial Services Committee was charged with finding $1 billion in savings from programs under its jurisdiction. Hill told the Rules Committee that the provisions approved by his committee—in a party line vote—would save $5.2 billion.

In her Rules Committee testimony, Financial Services Committee ranking Democrat Representative Maxine Waters, (D-Calif.), blasted the Republican plan to cut CFPB funding.

"This budget scheme will slash the Bureau's budget by 70 percent and put the agency's crucial work – like cracking down on illegal junk fees, tackling discrimination in housing, and protecting servicemembers and students from scams – to a grinding halt," she said.

The Senate has not yet considered the reconciliation bill, so it is not possible to predict what changes Chairman Senator Tim Scott, (R-S.C.) of the Senate Banking, Housing and Urban Affairs Committee, and other Senators, may push. During the last Congress, Scott cosponsored legislation that would have subjected the CFPB to the annual appropriations process. Significantly, reconciliation bills are not subject to filibusters in the Senate and, thus, may be passed with a simple majority vote. As a result, no votes from Democrats would be needed to pass the bill in the Senate.

American Bankers Association President and CEO Rob Nichols has said the ABA supports the Financial Services provisions, but favors larger changes at the CFPB.

"We have long argued that the CFPB should be funded through the traditional appropriations process and led by a bipartisan commission rather than a single director, consistent with other federal agencies," Nichols said.

Consumer Financial Services Group

CFPB Won't Make Small Business Reporting Rule a Priority

The CFPB has announced it will not make enforcement of its rule requiring financial institutions to report their lending to women-owned, LGBTQI+-owned, and minority-owned small businesses a priority.

"The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses," the Bureau said, in announcing the move. "Even absent resource constraints, the Bureau would deprioritize enforcement of this rule because of the unfairness of enforcing it against entities not protected by the court's stay but similarly situated to parties that are protected by the stay."

That stay only applies to plaintiffs and intervenors in a lawsuit challenging the rule. The plaintiffs include, among others, members of the American Bankers Association, the Independent Community Bankers of America, and America's Credit Unions.

In March 2023, the CFPB finalized the small business reporting rule, informally known as the "Section 1071 Rule." It refers to the Section of Dodd-Frank that creates the reporting requirement.

Only financial institutions that originated at least 100 covered small business loans in each of the two preceding calendar years are subject to the rule. The revised compliance dates for the rule, which vary based on small business lending volume, are July 18, 2025, January 16, 2026, and October 18, 2026. The initial compliance dates were stayed based on a ruling of the U.S. District Court for the Southern District of Texas in a lawsuit filed by a Texas banking trade association and Texas bank, with other parties later intervening. The suit was based on various arguments, including that the funding structure of the CFPB was unconstitutional, and that the Bureau exceeded its statutory authority and relied on inaccurate data to estimate implementation costs. As previously reported, the U.S. Supreme Court held in May 2024 that the funding structure is constitutional, so the district court then turned its attention to the other arguments of the plaintiffs.

In September 2024, the district court issued a summary judgment in favor of the CFPB. The plaintiffs appealed to the U.S. Court of Appeals for the Fifth Circuit and asked for a stay pending appeal and for the appeals court to toll compliance deadlines.

"A new President was inaugurated January 20, 2025," the appeals court said. "This case had already been set to be orally argued on February 3, 2025. The morning of oral argument, CFPB notified the court that '[c]ounsel for the CFPB has been instructed' by new leadership 'not to make any appearances in litigation except to seek a pause in proceedings.'" Additionally, the CFPB dropped its opposition to the request for a stay, and the Fifth Circuit Court of Appeals issued a stay.

The rule also is under attack on Capitol Hill. House Republicans are pushing legislation introduced by House Small Business Committee Chairman Representative Roger Williams, (R-Texas). That bill, H.R. 976, simply would repeal the rule altogether.

During the last Congress, the House and Senate voted to nullify the rule using the Congressional Review Act, but then-President Joe Biden vetoed it. While legislation under the Congressional Review Act is not subject to a filibuster in the Senate, a bill to repeal section 1071 would be subject to a filibuster, so 60 votes would be needed for legislation to repeal the rule.

As previously reported, the CFPB has indicated that it will reopen rulemaking on the Section 1071 rule.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

Coalition for a Democratic Workplace Urges U.S. Attorney General to Unilaterally Override Biden-Era NLRB Decisions

The Coalition for a Democratic Workplace (CDW) – an association of several hundred employers and employer associations – sent letters to U.S. Attorney General Pam Bondi to direct the National Labor Relations Board (NLRB) to ignore a swatch of Biden-era decisions pursuant to President Trump's executive order asserting that the President and the AG have the power to interpret the law for all agencies.

Ordinarily, employers try to get the NLRB to change a decision with which they disagree by challenging the decision on appeal. Employers also have the ability to argue to the Board in future cases, particularly after a change in administrations, that it should revisit its own precedent. The NLRB would then consider the issue and arguments and decide whether to change its earlier decision. However, the CDW has asked Bondi to unilaterally invalidate 15 Biden-era Board rulings, including 14 that set new precedents. They are as follows:

1. Amazon.com Services, LLC, 373 NLRB No. 136 (2024). The Board held that an employer may not inform employees of its views on unionization during a mandatory workplace meeting. CDW argues that the content-based restriction on speech is unconstitutional, beyond the Board's statutory charge, and risks chilling debate on a question of paramount importance for employers and employees alike: whether to unionize in the workplace.
2. Siren Retail Corp. d/b/a Starbucks, 373 NLRB No. 135 (2024). This case overturned over 40 years of precedent and declared that employers violate the NLRA when they tell employees that they will lose their direct access to management in the event of unionization. CDW argues that this holding raises the prospect of ULP liability for making straightforward statements of fact regarding the likely impact of unionization on that relationship. Further, the decision fails the Skidmore deference test, relies on faulty reasoning, and did not involve a call for amicus participation.
3. Home Depot USA, Inc., 373 NLRB No. 25 (2024). The Board ruled that an employee was protected by the NLRA when displaying a Black Lives Matter message on their uniform apron, which, while of political importance to the employee, had no relation to their employment. CDW argues the Board's ruling violated the First Amendment by forcing employers to endorse political speech.
4. Thryv, Inc., 372 NLRB No. 22 (2022). The Board ruled that employers are liable for any employee losses indirectly caused by an unfair labor practice, regardless how long the chain of causation may stretch, whenever the loss is found to be foreseeable. CDW argues that this ruling exceeds the Board's authority — and regardless of the third circuit ruling the same in NLRB v. Starbucks Corporation, 125 F.4th 78, 95 (3d. Cir. 2025) ("The NLRA . . . limits the Board's remedial authority to equitable, not legal, relief") — this remains the Board's precedent.
5. Lion Elastomers LLC II, 372 NLRB 83 (2023). The Board overruled General Motors LLC, 369 NLRB No. 127 (2020), which provided that the Board would evaluate whether an employee's abusive workplace conduct merited discipline based on the longstanding Wright Line test, turning on whether an employer would have taken the same action if the employee had not engaged in protected activity. In Lion Elastomers, the Board instead adopted a context-specific framework calling for different tests depending on the context in which the abusive conduct arose.
6. Miller Plastic Products, Inc., 372 NLRB No. 134 (2023). This case broadened the determination of what is considered "concerted" action under the NLRA by the "totality of the evidence."
7. McLaren Macomb, 372 NLRB No. 58 (2023). The Board ruled that certain confidentiality and non-disparagement clause in settlement and severance agreements with employees is a violation of the NLRA if overly broad.
8. Endurance Environmental Solutions, LLC, 373 NLRB No. 141 (2024). The Board revived the "clear and unmistakable" standard for contract interpretation, requiring employers claiming the right to make business changes in a unionized workplace to point to definitive language in a collective bargaining agreement in which the union "waived" the right to negotiate over the change. CDW argues that because it is impossible for the parties to a labor agreement to negotiate everything in their negotiations, the "clear and unmistakable" standard makes it much more burdensome for an employer to make critical business decisions without the involvement of union negotiators.
9. Metro Health Inc. d/b/a Hospital Metropolitano Rio Piedras, 373 NLRB No. 89 (2024). The Board ended the practice of accepting consent orders and, for the first time, found that administrative law judges lack the authority to approve consent orders.
10. American Federation for Children, Inc., 372 NLRB. No. 137 (2023). The Board expanded the scope of activities that fall under the protection of Section 7 of the Act to include employees' efforts to advocate on behalf of nonemployees.
11. Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 (2023). In this case, the Board ruled that it is a violation of the NLRA for an employer to decline a union's request for voluntary recognition unless the employer files a petition with the NLRB for an election. CDW argues that this decision is one of the Biden Board's "most pernicious" for several reasons. For example, a union seeking recognition may or may not have the support of a majority of the unit it wants to represent. In the past, the employer could refuse the union's request and put to the union the decision of filing for an election and testing whether it actually has the support it claims or go back to the drawing board. However, under this ruling, if the employer does not file the petition itself, it can be forced to bargain with the union without any election at all.
12. Stericycle, Inc., 372 NLRB No. 113 (2023). The Board ruled that workplace rules are presumptively unlawful if they "could" be interpreted to limit employee rights, based on the perception of the reasonable employee who is "economically dependent" on the employer. CDW argues this is vague because virtually any rule that could even remotely be read to tread on employee protected activity may be unlawful.
13. The Atlanta Opera, Inc., 372 NLRB No. 95 (2023). The Board made it more difficult for workers to qualify as independent contractors. CDW argues that under the new standard, even if workers can pursue many entrepreneurial opportunities and contract their services with many companies, they may still be deemed employees of those companies under the Act.
14. Tesla, Inc., 371 NLRB No. 131 (2022). This case allowed employees to wear union insignia in any way they please unless the employer can prove "special circumstances" justifying restrictions. CDW argues that under this ruling, even if the employer has a neutral policy regarding work wear, the employer cannot apply that policy to union insignia unless they can pass a rigorous, fact-specific inquiry into whether there are special circumstances justifying the restriction. CDW further cites to the Fifth Circuit's ruling in Tesla, Inc. v. NLRB, 86 F.4th 640 (5th Cir. 2023), holding that the NLRB does not have the authority to make all company uniforms presumptively unlawful.
15. American Steel Construction, Inc., 372 NLRB No. 23 (2022). The Board overturned PCC Structurals, Inc., 365 NLRB No. 160 (2017), and presumed the unit selected by the union is appropriate unless the employer can demonstrate that other employees share an "overwhelming" community of interest with the petitioned-for unit.

Ballard Spahr's Labor and Employment Group frequently advises employers on issues related to labor law and policy. We will continue to monitor the new administration's agenda and the impact of further changes to NLRB guidance. Please contact us if we can assist you with these matters.

Nalee Xiong and Brian D. Pedrow

Trigger Leads – Don't Forget About the States

As Rich Andreano blogged on April 15, 2025, legislation to prohibit or restrict so-called "trigger leads" in the home-buying process has been reintroduced in the House and Senate. The legislation has broad industry and consumer group support.

While we await the outcome of the proposed bills, it is worth noting that a number of states have enacted laws that impose restrictions on the manner in which brokers or lenders are permitted to leverage trigger leads in connection with their mortgage activities. These laws generally prohibit engaging in unfair or deceptive practices, require compliance with the firm offer of credit provisions under the Fair Credit Reporting Act, require an express disclosure that the broker or lender has no affiliation with the borrower's current lender, and prohibit the use of trigger leads for targeted marketing.

There are currently eight states – Connecticut, Kansas, Kentucky, Maine, Rhode Island, Texas, Utah, and Wisconsin – that restrict the use of trigger leads in some fashion, with Idaho (effective July 2025) and Arkansas (effective August 2025) following along shortly.

We note, the federal bills do not provide for the preemption of state law.

John D. Socknat

DOJ Lawyers, National Treasury Employees Union Attorney Square Off in Appeals Court Over CFPB Firings

Despite massive attempted layoffs and cancellation of third-party vendor contracts, the Trump administration did not and does not intend to shut down the CFPB, a Justice Department attorney told a federal appeals court on May 16 in connection with oral arguments on the government's appeal of the preliminary injunction issued by the district court, which essentially required the government to maintain the status quo pending the outcome of the litigation.

"Agency heads all the time have goals or plans or intents in their mind that govern how they interact with their staff on a day-to-day basis and the sorts of directives they give," Eric McArthur told the Federal Appeals Court for the District of Columbia. He added that such actions never have been interpreted as "final action" subject to challenge under the Administrative Procedure Act.

Jessica Bennett of Gupta Wessler, representing the National Treasury Employees Union (NTEU), said that the firing of more than 1,400 employees—which only would leave some 200 employees at the CFPB—was a clear indication that the administration intended to shutter the Bureau.

Employees were publicly told to return to work, while they were privately told not to, she asserted.

"If you're eliminating positions, that's not a pause," she said. "That's permanent."

The appeals court had previously refused to stay the preliminary injunction issued by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia's order to ensure that the plaintiffs could receive "meaningful final relief" if they prevail in the suit.

McArthur told the appeals court that Jackson did not adequately consider Paoletta's communications with Bureau employees making it clear that they were supposed to continue activities authorized by Congress.

But Bennett said that there was overwhelming evidence that the administration was shutting down the agency. She said that the Bureau had indicated that it intended to continue HMDA and consumer response activities, but CFPB officials cancelled the contracts needed to do that work.

Appeals court Judge Nina Pillard seemed skeptical of the government's arguments. She cited Elon Musk's social media post that said "CFPB RIP" as evidence that the agency was being shut down.

"There's a really powerful record here of quite more ambitious action," Pillard said.

However, Judges Gregory G. Katsas and Neomi Roa appeared to be more skeptical of the NTEU's argument.

Rao questioned whether a district court judge should decide what agency Reductions in Force are appropriate.

"This has a little bit of a nailing Jello to the wall quality to it," Katsas said. "There's no rule or order we can focus on as the basis for our review."

We think that the majority of the court of appeals will narrow the breadth of the preliminary injunction to give the Trump administration more flexibility to manage the CFPB pursuant to its new supervisory and enforcement policy as long as the CFPB continues to perform the functions mandated by statute.

Alan S. Kaplinsky, John L. Culhane, Jr., and Richard J. Andreano, Jr.

Congress Introduces Bipartisan Bill to Provide Federal Paid Family Leave Funding for States

On April 30, 2025, Congressional Representatives Stephanie Bice (R-OK) and Chrissy Houlahan (D-PA) introduced the More Paid Leave for More Americans Act in the House of Representatives.

The bill would develop a three-year pilot program administered by the federal Department of Labor (DOL) that would provide grant funding to states that establish paid family leave programs in partnership with private companies. To qualify for fundings, states would need to implement a program that:

• Provides all workers in the state with at least six weeks of paid leave for the birth or adoption of a child, and potentially other reasons for leave covered under the federal Family and Medical Leave Act (FMLA);
• Provides all workers in the state with wage replacement benefits between 50 percent and 67 percent of a worker's income while on leave, with a maximum benefit amount equal to 150 percent of the state's average weekly wage;
• Utilizes a public-private partnership model, similar to a workers' compensation insurance system where insurance premiums, paid by both employers and employees, fund the program and are administered by a third-party insurance company, AND
• Participation in a newly developed Interstate Paid Leave Action Network.

The bill would also develop an "Interstate Paid Leave Action Network," a national interstate framework to help states coordinate and streamline benefit payments, create harmonization between state leave programs, share data, and reduce confusion for workers who work in a different state than where they live. The proposal also claims the network would identify best practices from existing state paid leave programs, resolve conflicts with other states' programs, and help employees access their benefits. As of May 2025, approximately 13 states have implemented state paid family and medical leave insurance systems, including California, Colorado, Minnesota, New Jersey, Oregon, and Washington.

The bill has not yet been taken up by either the House or Senate labor committee for review, which is the first step required for the bill to become a law.

Ballard Spahr's Labor and Employment Group continues to advise employers on labor, employment, and policy issues. We will keep monitoring developments under the new administration and their impact on employers. Please contact us if we can assist you with these matters.

Shirley S. Lou-Magnuson, Brian D. Pedrow, and Brenna R. McLaughlin

New York Governor Hochul Signs Legislation That Includes BNPL Licensing Requirements and Other Consumer Protection Provisions

New York Governor Kathy Hochul has signed legislation that, among other things, imposes new licensing requirements on Buy Now, Pay Later (BNPL) services.

In touting the FY26 budget bill that contained the consumer protection provisions, Hochul commented, "Our tax cuts, credits, and rebates won't be much help if bad actors are able to scam or mislead New Yorkers. These new laws are about fairness, transparency, and accountability and will help consumers save money and spend it wisely."

For BNPL, the law establishes a licensing and supervision requirement and limits interest on BNPL products to 16 percent. It also prohibits the assessment of any unfair, abusive, or excessive penalty or fee.

The statute will also introduce safeguards, such as disclosure requirements, dispute resolution standards, and data privacy protections to ensure consumers are better protected when using these financial products, according to state officials.

'"Buy Now, Pay Later' loans are increasingly popular but pose risks to consumers, including overextension, inconsistent credit reporting, data exploitation, and excessive fees," state officials said. "These concerns highlight the need for stronger oversight in this rapidly growing financial sector."

The new law comes, as the CFPB says it will not prioritize enforcement of its BNPL rule, with Bureau officials also saying they may consider repealing the rule altogether.

The budget legislation also includes several other provisions that Hochul said will protect consumers:

• Easier cancellation for online subscriptions. New York state officials said that cancellation of online subscriptions are challenging. Under the new law, cancellation of online subscriptions must be as easy as it was to sign up for the subscription. The goal is to make the cancellation process "simple, transparent, and fair," officials said.
• Surveillance pricing. As consumers spend more time and money online, they also are sharing more information, such as browsing behavior, location, and purchase history with the companies they interact with. That allows the company to feed personal data into algorithms, allowing them to generate a unique price for each consumer. The FTC has termed this practice "surveillance pricing," and it means that a person and his neighbor could be charged different prices for the same product. "This practice is opaque and strips consumers of their ability to comparison shop and plan for the price of goods and services," state officials wrote. The new law includes first-in-the-nation provisions that require businesses to disclose clearly to consumers when a price was set by an algorithm using their personal data, subject to certain exceptions.
• Standardized retail returns and refunds. Consumers are increasingly shopping online and are having to juggle return windows, refund formats, shipping practices, and other issues. "With e-commerce sales rising and returns accounting for billions of dollars annually, New Yorkers deserve stronger consumer protections" state officials said. The new law includes legislation to require online retail sellers to post return and refund policies in a way that is easily accessible for consumers.

Consumer Financial Services Group

Looking Ahead

Mortgage Compliance Update Part I

An ACES Quality Management, QC Now Web Series | June 4, 2025, 2:00 PM ET

Speakers: Richard J. Andreano, Jr. and Amanda Phillips, ACES Quality Management's EVP of Compliance

What Is Happening at the Federal Agencies That Is Relevant to the Residential Mortgage and Settlement Service Industries?

A Ballard Spahr Webinar | June 11, 2025, 12 PM ET

Speakers: Richard J. Andreano, Jr., John L. Culhane, Jr., Matthew A. Morr, and John D. Socknat

Mortgage Compliance Updates Part II

An ACES Quality Management, QC Now Web Series | June 11, 2025, 2:00 PM ET

Speakers: Richard J. Andreano, Jr. and Amanda Phillips, ACES Quality Management's EVP of Compliance

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