Mortgage Banking Update - October 2, 2025 - Financial Services

October 2 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, our lawyers discuss recent happenings at the CFPB, current state statutes that apply to AI in the consumer financial services industry, the DOL's announcement of its Spring 2025 regulatory agenda, and much more.

Podcast Episode: Current State Statutes That Apply to AI in the Consumer Financial Services Industry

In this episode of the Consumer Finance Monitor podcast, host Alan Kaplinsky welcomes Pat Utz, CEO and co-founder of Abstract, a venture capital-backed AI company headquartered in New York. Pat brings extensive expertise on artificial intelligence. The podcast focuses on current developments in AI regulation and implementation, first covering President Trump's recent "Winning the Race: America's AI Action Plan" and its potential impact on federal policy. Alan and Pat discuss the evolving landscape of AI statutes, and developments at the state-level in places like Utah and Colorado.

Pat and Alan Kaplinsky provide insights into bipartisan efforts at both state and federal levels to address issues ranging from consumer safety to business innovation. They highlight the practical challenges and opportunities for businesses leveraging AI, such as the need for transparency when AI is used in customer interactions and compliance with state-level enforcement. Pat explains how open-source models are increasingly being promoted, pointing to President Trump's executive order and shifts in the industry. He also underscores the importance for businesses to track where data is processed—whether with major vendors or proprietary systems—and adapt to varying regulatory frameworks, notably those set by states like California that tend to influence national practice.

The episode concludes by focusing on the wide array of AI usage in financial services, specifically credit scoring and underwriting; lending; and fraud detection. Pat provides key lessons institutions should be mindful of as AI adoption continues to grow in the industry.

Consumer Finance Monitor is hosted by Alan Kaplinsky, senior counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

To listen to this episode, click here.

Consumer Financial Services Group

Podcast Episode: The Supreme Court's Ruling on Universal Injunctions in the Birthright Citizenship Cases – Part 1

This podcast show is a repurposing of Part 1 of a webinar we produced on August 13, 2025, which explored the U.S. Supreme Court's pivotal 6-3 decision in Trump v. CASA, Inc., a ruling that significantly curtails the use of nationwide or "universal" injunctions. A universal injunction is one which confers benefits on non-parties to the lawsuit. This case marks a turning point in federal court jurisprudence, with profound implications for equitable relief, national policy, and governance.

Our distinguished panel of legal scholars, Suzette Malveaux (Roger D. Groot Professor of Law, Washington and Lee University School of Law), Portia Pedro (Associate Professor of Law, Boston University School of Law), and Alan Trammell (Professor of Law, Washington and Lee University School of Law) are joined by experienced litigators Alan Kaplinsky, Carter G. Phillips (Former Assistant to the Solicitor General of the United States and Partner, Sidley Austin LLP), and Burt M. Rublin (Senior Counsel and Appellate Group Practice Leader, Ballard Spahr LLP). These panelists dive deep into the Court's decision, unpacking its historical foundation, analyzing the majority, concurring, and dissenting opinions, and evaluating its far-reaching effects on all stakeholders, including industry groups, trade associations, federal agencies, the judiciary, the executive branch, and everyday citizens.

This podcast show and the one we release one week from today cover these critical topics:

The originalist and historical reasoning behind the Court's rejection of universal injunctions
A detailed analysis of the majority, concurring, and dissenting opinions
The ruling's impact on legal challenges to federal statutes, regulations, and executive orders
The potential role of Federal Rule of Civil Procedure 23(a) and 23(b)(2) class actions as alternatives to universal injunctions, including the status of the CASA case and other cases where plaintiffs have pursued class actions
The use of Section 706 of the Administrative Procedure Act (the APA) to "set aside" or "vacate" unlawful regulations and Section 705 of the APA to seek stays of regulation effective dates
The viability of associational standing for trade groups challenging regulations on behalf of their members
The ruling's influence on forum selection and judicial assignment strategies, including "judge-shopping"
The Court's increasing use of its emergency or "shadow" docket, rather than its conventional certiorari docket, to render extraordinarily important opinions

This is a unique opportunity to hear from leading experts as they break down one of the most consequential and controversial Supreme Court decisions of this Supreme Court term. These podcast shows will provide you with valuable insights into how this ruling reshapes the legal landscape.

To listen to this episode, click here.

Consumer Financial Services Group

President Trump Signs 'Trigger Leads' Bill

President Trump has signed a bill that would restrict the use of "trigger leads" in the mortgage industry. The legislation will become effective on March 5, 2026.

We previously reported on the passage of the legislation here.

The law amends the Fair Credit Reporting Act to prohibit consumer reporting agencies from furnishing a trigger lead except in limited circumstances.

House Financial Services Committee Chairman Rep. French Hill, (R-Ark.) applauded President Trump's signing of the bill. "This important bill protects homebuyers' personal financial information, while encouraging competition and choice in the mortgage market," he said.

Sen. Jack Reed, (D-R.I.) also applauded passage of the legislation.

"This new law will protect consumers and head off a flood of annoying, unwanted solicitations," he said. "Homebuyers going through an already stressful process should not have their private information sold to spammers without consent."

He added, "This is a rare data privacy win."

Richard J. Andreano, Jr.

CFPB Releases Ambitious Regulatory Agenda

The CFPB has released an ambitious Spring Regulatory Agenda that lists 24 regulatory initiatives the bureau has been and/or will be working on during the 12-month period from June 2025 through May 2026 as well as one long-term action.

"The CFPB is under interim leadership pending the confirmation of a permanent director, and is carefully considering various sources in setting its future priorities," the agency said. However, no permanent director has yet been nominated since the withdrawal of the nomination of Jonathan McKernan.

Pre-Rule Stage.

The agenda contains nine items in the Pre-Rule stage, which generally indicates that the agency is considering addressing an issue. The Bureau has previously submitted filings with OMB about three of those initiatives, its Mortgage Loan Originator Compensation Rule and its Discretionary Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA). It has also issued advance notices of proposed rulemaking addressing four of those initiatives, its Larger Participant Rules for the Automobile Financing, Consumer Debt Collection, Consumer Credit Reporting, and Money Transfer markets.

Proposed Rule Stage

The agenda contains 10 items in the Proposed Rule stage, which generally indicates that the CFPB plans to issue a proposal. The Bureau has already issued notices of proposed rulemaking addressing four of those initiatives. One involves the proposed rescission of an existing rule, namely, the Registry of Nonbank Persons Subject to Certain Agency and Court Orders Rule. Three involve the reconsideration of existing rules, namely, the Payday, Vehicle, Title and Certain High-Cost Installment Loans Rule (also known as the Payday Loan Rule or the Small Dollar Loan Rule) , the Personal Financial Data Rights Rule (also known as the Section 1033 Rule), and the Small Business Data Collection Under the Equal Credit Opportunity Act (ECOA) Rule (also known as the Section 1071 Rule). One initiative, not yet the subject of a proposed rule, would involve "clarifying the obligations imposed by" the ECOA, which may signal a review by the Bureau of the extent to which the ECOA encompasses a disparate impact theory of liability.

Final Rule Stage

The agenda contains five items in the Final Rule stage, which generally means that the Bureau is preparing or has prepared a final rule. The Bureau indicated, however, that in one case, involving the Rescission of State Official Notification Rules, it "expects" to withdraw a final rule that it previously issued because of significant adverse comments it received. It did so, effective July 21.

Long-Term Initiatives

Separately, the Bureau also identified one potential long-term initiative, namely monitoring the residential mortgage loan market to determine whether any further adjustments are required to its Ability to Pay and Qualified Mortgage definitions in Regulation Z.

We plan to discuss Pre-rule, Proposed Rule, Final Rule, and Long-Term Initiatives in more detail in subsequent posts. For now, we would note that, even though many of these items are deregulatory in nature, this is still an ambitious agenda for an agency expected to undergo significant reductions in staffing.

In that regard, an affidavit previously filed in the National Treasury Employees Union (NTEU) case by Mark Paoletta, the CFPB's chief legal officer, said that as part of its plan to eliminate more than 1,400 jobs at the Bureau, the Trump administration was proposing to decrease the Research Monitoring and Regulations Division from 230 employees to 22 employees. Three employees would be assigned to the Research Division and 10 would be assigned to the Regulations Division.

However, the Bureau has not yet been able to move forward with those cuts. The district court in the NTEU case issued a preliminary injunction which, among other things, precluded the CFPB from implementing them. Even though a panel of the D.C. Circuit vacated that preliminary injunction, by a 2-1 majority, the mandate for the panel's decision has not yet issued. The Bureau's ability to move forward with those cuts will depend on whether the NTEU successfully petitions for en banc review by the D.C. Circuit or Supreme Court review.

In the meantime, the One Big Beautiful Bill Act, P.L. 119-21, significantly curtailed the CFPB's budget. As a result, according to Bloomberg Law, the CFPB's Office of Human Capital has just sent an email to all employees advising that the Bureau is "evaluat[ing] workplace optimization opportunities" and "considering a possible reduction in force."

This agenda is raising eyebrows across the consumer financial services industry. On November 4, Ballard Spahr will present a must-watch webinar breaking down this ambitious plan.

Here's why this webinar about the agenda is a must-watch event:

24 separate rulemaking items – the largest number in CFPB history.
A shrinking rulewriting staff and budget–- expected to be only 10 lawyers after an anticipated reduction-in-force – raising serious doubts about whether such an ambitious plan can be achieved.
A number of these items may actually be opposed by industry even though they purport to be deregulatory.

What does this mean for your business? Which proposals are most likely to move forward? And which may stall out?

Join us as we break it all down.

Why You Should Attend:

Get insider analysis of the most important items on the agenda
Understand how staffing and budgetary shortages may affect rulemaking and compliance timelines
Learn how to prepare for regulatory uncertainty in a changing political climate.

Don't miss this opportunity to get ahead of the CFPB's most ambitious agenda yet.

November 4, 2025

12:00-1:30PM ET

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

CFPB Spring 2025 Regulatory Agenda Mortgage Items

The CFPB recently released its Spring 2025 Regulatory Agenda. In this post, we focus on various residential mortgage-related items included in the Regulatory Agenda. We will address other aspects of the Regulatory Agenda in separate blog posts. To register for our webinar on the Regulatory Agenda, click here.

An initial observation regarding the Regulatory Agenda in general is that it is very ambitious, with a total of 24 rulemaking items, plus one long-term action, yet it is not clear how the CFPB could engage in this level of rulemaking given the significant reduction in force planned at the CFPB that we have reported on extensively, and most recently here and here, and also addressed in a recent podcast.

Pre-Rule Stage – Discretionary Provisions of Loan Originator Compensation Rule

Of particular importance to the mortgage industry, the CFPB plans to seek information in advance of preparing a proposed rule to rescind all or parts of the "discretionary compensation provisions" of its loan originator compensation requirements under the Truth in Lending Act (TILA). Those provisions were published in a revised Regulation Z loan originator compensation rule on February 15, 2013. The Regulatory Agenda indicates a July 2025 timeframe for an advance notice of proposed rulemaking. No such notice has been issued to date.

While the mortgage industry has lobbied for revisions to the rule, it may well oppose the rescission of various provisions. For example, Dodd-Frank added to TILA a provision under which a loan originator may not receive compensation from a party other than the consumer if the consumer pays discount points or origination points or fees. Congress gave the CFPB authority to waive or provide exemptions to this restriction, and the loan originator compensation rule includes an exemption that permits a party other than the consumer to compensate a loan originator even if the consumer pays discount points or origination points or fees, as long as the consumer does not pay compensation directly to the loan originator. The rule also has additional exemptions that are not in TILA. The exemptions (1) expressly provide for contributions to designated tax-advantaged plans, such as 401k plans, of loan originators, (2) permit mortgage profits-based payments to loan originators, subject to certain limitations, and (3) permit a loan originator to lower their compensation on a loan to cover an unforeseen cost, or unforeseen increase in a cost, that the consumer would otherwise have to pay. The industry likely would oppose the complete elimination of the exemptions.

Pre-Rule Stage – Discretionary Provisions of Regulation X and Regulation Z Servicing Rules

The CFPB plans to issue advance notices of proposed rulemaking to solicit comments and information to help the CFPB assess the costs and benefits of the "discretionary provisions" of the Regulation X and Regulation Z mortgage servicing rules for the purpose of determining whether the CFPB should amend or rescind those provisions. The Regulatory Agenda indicates a July 2025 timeframe for the advance notices of proposed rulemaking. No such notices have been issued to date. The details of the proposals will be key with regard to whether the mortgage industry will support or oppose the changes.

Final Rule Stage – Finalization of Mortgage Servicing Rule Revisions

The CFPB plans to finalize the mortgage servicing rule revisions that it proposed in July 2024 . The Regulatory Agenda indicates a December 2025 timeframe for a final rule. While the mortgage industry seeks changes to the mortgage servicing rules, it generally opposed the proposal. If the final rule is close to the proposal, it likely will face one or more legal challenges from the industry given the significant operational burdens that would be imposed on servicers, the absence of express statutory authority for many aspects of the proposal, and the language access requirements under consideration by the CFPB at the time of the proposal that did not appear in the proposed regulatory text and were simply addressed as concepts in the preamble to the proposal.

Long-Term Action – Ability to Repay Rule

In a separate long-term actions part of the Regulatory Agenda the CFPB addresses the ability to repay requirements applicable to mortgage loans under TILA. After summarizing the regulatory history of the Regulation Z ability to repay rule, the CFPB states "[a]s the Bureau continues to monitor market developments, the Bureau will evaluate whether any further adjustments to ATR requirements and QM definitions are warranted." The CFPB may need to tread carefully.

In the waning days of Director Kathleen Kraninger's tenure as CFPB Director, the CFPB issued a final rule amending the ability to repay rule. Among other changes, the final rule replaced the strict 43% debt-to-income (DTI) ratio basis for the general qualified mortgage with an annual percentage rate (APR) limit. Early in Director Rohit Chopra's tenure as CFPB Director, the CFPB moved to delay the implementation of the change, which was opposed by both industry and consumer groups. An apparent concern of the groups was that the CFPB would use the delay to revisit the general qualified mortgage change, and both industry and consumer groups preferred the APR-based qualified mortgage over the DTI-based qualified mortgage. While the CFPB delayed the implementation of the change, it did not act to modify the change. Any future attempts to move away from the APR-based qualified mortgage may be met with opposition by industry and consumer groups.

Proposed Rule Stage – Equal Credit Opportunity Act/Regulation B

Although not a mortgage-specific item, the agenda also provides that the CFPB is considering whether rulemaking or other actions regarding Regulation B would facilitate compliance with the Equal Credit Opportunity Act (ECOA) by clarifying the obligations imposed by the statute. As previously reported, President Trump issued an executive order in April 2025 providing that "[i]t is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the Constitution, Federal civil rights laws, and basic American ideals." Regulation B contains language supporting the use of the disparate impact theory under the ECOA. Query whether the CFPB is now considering the elimination of such language from the Regulation.

We will continue to monitor CFPB residential mortgage related regulatory actions, as well as all other CFPB regulatory agenda related actions, and will blog about further developments as they occur.

Richard J. Andreano, Jr.

CFPB Spring 2025 Regulatory Agenda – Final Rule Stage – Remittance Transfer Rule (Regulation E)

The CFPB announced in its Spring 2025 Regulatory Agenda that it will be finalizing amendments to the Remittance Transfer Rule under Regulation E, which implements the Electronic Funds Transfer Act (EFTA), to revise disclosure requirements and corresponding model forms to include clarifying information about the types of inquiries that may be most efficient to direct to the CFPB and the State agency that licenses the remittance transfer provider. This follows the CFPB's issuance of an notice of proposed rulemaking on September 30, 2024, with the comment period ending on November 4, 2024.

If adopted as proposed, Section 1005.31(b)(2)(vi) would be revised to state:

A statement that the sender can contact the State agency that licenses or charters the remittance transfer provider with respect to the remittance transfer and the Consumer Financial Protection Bureau if the sender has unresolved problems with respect to the remittance transfer or complaints about the remittance transfer provider, using language set forth in model form A–37 of appendix A to this part or substantially similar language. The disclosure must provide the name, telephone number(s), and website of the State agency that licenses or charters the remittance transfer provider with respect to the remittance transfer and the name, toll-free telephone number(s), and website of the Consumer Financial Protection Bureau.

The bolded provision would replace the former text, stating "for questions or complaints about the remittent transfer provider." The language encourages consumers to first attempt to resolve their issues with the remittance transfer providers before contacting the CFPB or State agencies.

Likewise, several appendices would be revised to state:

If you have unresolved problems with your money transfer or complaints about [insert name of remittance transfer provider], contact:

State Regulatory Agency

800–111–2222

www.stateregulatoryagency.gov

Consumer Financial Protection Bureau,

855–411–2372

855–729–2372 (TTY/TDD)

www.consumerfinance.gov

The CFPB's regulatory agenda targets December 2025 as the timeframe for issuance of the final rule. We expect that remittance transfer providers will have 60 days after the publication of the final rule in the Federal Register to implement the required changes to their disclosures.

We will address other aspects of the Regulatory Agenda in separate blog posts. To register for our webinar on the Regulatory Agenda, click here.

Kristen E. Larson

CFPB Spring 2025 Regulatory Agenda – Pre-Rule Stage – Identity Theft and Coerced Debt (Regulation V)

The CFPB is considering proposing amendments to Regulation V, which implements the Fair Credit Reporting Act (FCRA), to address concerns related to information furnished to consumer reporting agencies regarding coerced debt. This follows the CFPB's issuance of an advance notice of proposed rulemaking on December 13, 2024 to solicit information on amending the definitions of "identity theft" and "identity theft report," as well as other related amendments to Regulation V.

The current proposed rulemaking stems from a petition for rulemaking from the National Consumer Law Center and the Center for Survivor Agency and Justice. The petition defines "coerced debt" as "all non-consensual, credit-related transactions that occur in a relationship where one person uses coercive control to dominate the other person." The petition requests that the CFPB take the following actions in the FCRA rulemaking:

modify the definition of "identity theft" to include "without effective consent;"
specify what constitutes effective consent and provide relief for persons with coerced debt to utilize the blocking of information resulting from identity theft;
modify the definition of "identity theft report" to reflect the modified definition of "identity theft;" and
clarify that no consumer reporting agency can refuse to block information under 15 U.S.C. §1681c-2(c)(1)(C) if the consumer is a victim of coerced debt.

To facilitate the proposed rulemaking, the advance notice sought comments on the following:

The information that exists regarding the prevalence and extent of the harms to victims of economic abuse, particularly coerced debt,
The extent to which current federal or state laws provide protections against adverse credit reporting to victims of economic abuse,
The extent to which coerced debt reflects the credit risk of the survivor independent of the abuser,
The cost and benefits of amending Regulation V,
How "coerced debt" should be defined,
Whether any other groups of persons face barriers from coerced debt that can be solved by rulemaking, and
The documentation required to prove coerced debt.

The extended comment period ended on April 7, 2025. Fifty comments were submitted, including comments from consumers, the National Consumer Law Center, Illinois Credit Union League, America's Credit Unions, AARP, NYS Office for the Prevention of Domestic Violence, Texas Council on Family Violence, Women's Center & Shelter of Greater Pittsburgh, Oregon Justice Center, Greater Boston Legal Services, Receivables Management Association International, and a few credit unions. The CFPB's regulatory agenda targets May 2026 as the timeframe for the next step in the rulemaking. We expect this rule drafting to be a challenging task as regulators will need to ensure that debtors who are not victims of coercion will not be able to avail themselves of the protections intended to be offered to victims under these amendments.

We will address other aspects of the Regulatory Agenda in separate blog posts. To register for our webinar on the Regulatory Agenda, click here.

Kristen E. Larson

NFIP Authorization Expires September 30

If Congress does not reauthorize the National Flood Insurance Program (NFIP) by September 30, major parts of the program will expire—a lapse that could cause major problems in the mortgage industry.

In past NFIP lapses, borrowers were not able to purchase flood insurance to close, renew, or increase loans secured by property that required flood insurance. The Congressional Research Service (CRS) estimated that during a lapse in June 2010, each day more than 1,400 home sale closings were canceled or delayed. That represents more than 40,000 sales each month.

The House has passed H.R. 5371, legislation that would fund much of the government—and reauthorize the NFIP– until Nov. 21. However, the Senate has rejected that legislation.

If the NFIP is allowed to lapse, the CRS has said that flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. The authority for the NFIP to borrow funds from the U.S. Treasury would be reduced from $30.425 billion to $1 billion.

Despite repeated efforts, Congress has been unable to enact a long-term NFIP reauthorization. Traditionally, the NFIP has been reauthorized in must-pass short-term and long-term spending measures. The CRS said that the NFIP has been reauthorized in such legislation 33 times since 2017. The last long-term reauthorization was the Biggert-Waters Flood Insurance Reform Act of 2012.

Members of Congress have pushed legislation to reauthorize the program, but those efforts have failed. Most recently, in August, Senators, Bill Cassidy, (R-La.) and Cory Booker, (D-N.J.) sought stakeholder comments on how to improve the NFIP.

Richard J. Andreano, Jr.

U.S. Supreme Court Allows President Trump to Fire Democrat Rebecca Slaughter From FTC, for Now

For now, the U.S. Supreme Court is allowing President Trump to fire Democratic FTC Commissioner Rebecca Slaughter, in a case that could upend a 1935 court precedent.

Significantly, in an unsigned order, the Court agreed to hear the case, even though there has been no final decision on the merits by a lower court. The Court scheduled oral arguments in the case for December.

The three liberal justices, Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson dissented.

Alvaro Bedoya and Slaughter were dismissed from the FTC without cause earlier this year. They filed suit, contending that their dismissals were illegal since the FTC is supposed to be an independent agency. They said that President Trump's decision was in direct violation of federal law, citing the 1935 Supreme Court ruling, Humphrey's Executor, in which the court upheld the constitutionality of the for-cause removal standard applicable to FTC commissioners.

The administration has argued that the modern FTC is different from the 1935 FTC in that it now exercises significant executive powers and, therefore, FTC commissioners should be subject to removal by the President without cause.

Bedoya resigned from the commission and no longer is part of the suit.

Judge AliKhan of the U.S. District Court of the District ruled that Slaughter had been illegally fired, as did two of the judges on the U.S. Court of Appeals for the District of Columbia's three-judge panel. However, Chief Justice John Roberts issued a stay of the appellate court's order and, now, a majority of the Court has agreed to issue a stay.

In issuing the stay, the Supreme Court directed the parties to brief and argue:

Whether the statutory removal protections for members of the FTC violate the separation of powers; and if so, should they be overruled?
Whether a federal court may prevent a person's removal from public office "either through relief at equity or at law."

In their dissent, the three liberal judges said the Court's majority has handed full control of independent agencies to the president.

"He may now remove—so says the majority, though Congress said differently—any member he wishes, for any reason or no reason at all," they said. They added that until the Court reverses Humphrey's, it governs removal of FTC members, and that the Court should not use its emergency docket to take action that is not consistent with Humphrey's.

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

Supreme Court Allows Lisa D. Cook to Remain as Member of the Fed Until at Least January

Despite President Trump's efforts to fire her, the Supreme Court has ruled that Lisa D. Cook can remain on the Federal Reserve Board at least until the Court hears oral arguments in January 2026.

The administration had asked the Supreme Court for a stay of a preliminary injunction issued by the U.S. District Court for the District of Columbia that allowed Cook to keep her job. That injunction was upheld by the U.S. Court of Appeals for the District of Columbia.

President Trump attempted to remove Cook, saying she had claimed on mortgage applications that residences in Michigan and Georgia both were her primary residences.

However, lawyers for Cook have asserted that reports confirm that Cook properly declared her Michigan home as her principal residence, and that, as part of her mortgage application, she described the property in Georgia as a vacation home.

Cook also warned that her firing would undermine the independence of the Fed and erode public confidence in it.

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

Banking Groups Contend Banks Will Waste Time, Money If Section 1033 Deadlines Are Not Delayed

Banking groups said their members will have to unnecessarily spend significant time and money if a federal court does not delay the compliance dates of an open banking rule that the CFPB said it intends to rewrite.

"Plaintiffs and their members cannot simply stop all work needed to timely comply with a complex regulation that remains on the books, gambling on the outcome of a process that will last well into 2026 at a minimum," the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank (Plaintiffs), said in a reply brief filed in the U.S. District Court for the Eastern District of Kentucky.

The Plaintiffs filed suit the day the Biden administration issued the rule, saying that the CFPB had exceeded its authority. Judge Danny C. Reeves issued a stay in the case.

However, the staggered compliance dates set forth in the rule, which are based on asset size for depository institutions and receipt volume for non-depository institution data providers, remain in effect (April 1, 2026, for the first tier of institutions, April 1, 2027, for the second tier of institutions, April 1, 2028, for the third tier of institutions, April 1, 2029, for the fourth tier of institutions, and April 1, 2030, for the final tier of institutions).

The Plaintiffs have asked Judge Reeves to issue a stay to postpone those compliance dates and to enjoin enforcement of the rule until one year after the conclusion of the litigation. No date has been sent for a hearing on the motion.

At first, the Trump administration agreed that it had exceeded its authority in promulgating the rule and said that it intended to simply kill the rule. More recently, the CFPB stated it was issuing a new rule. Last month, the CFPB issued an Advance Notice of Proposed Rulemaking soliciting comments and data on four specific issues related to the implementation of the agency's open banking rule.

The Plaintiffs said, "In other words, the Bureau will likely begin analyzing comments and formulating a new rule in early 2026 at the soonest, and that process took over nine months for the existing Rule."

The Plaintiffs point out in a status report on the case, that the Bureau has not taken a position on whether to delay the compliance dates.

By contrast, the Financial Technology Association (FTA), an intervenor in the case, has said Judge Reeves should not issue a stay on the compliance dates. The FTA supports the rule, as it was written. "The Court should leave the stay in place to allow the rulemaking process to unfold," the FTA said.

The FTA added, "Those delays in full implementation of Section 1033 harm the public interest. And the public interest is best served by allowing the agency's process to unfold in the ordinary course, without injecting this Court into the rulemaking."

The FTA stated that the proper course of action is to maintain the current stay in the case and, at most, require more frequent reporting from the parties in the case.

Kristen E. Larson

DOL Announces Spring 2025 Regulatory Agenda

After briefly releasing — and then quickly withdrawing — its regulatory agenda last week, the Department of Labor (DOL) has republished its Spring 2025 unified agenda. According to the DOL's press release, the Spring 2025 agenda reflects a focus on transparency, deregulatory actions, and clarifying employer obligations across a range of labor and employment issues. Several initiatives are directly tied to recent executive orders and court decisions, with a mix of new rulemakings and long-term reviews. The full agenda can be viewed here.

Highlights mentioned in the press release include:

1. Pharmacy Benefit Manager (PBM) Fee Disclosure

The DOL is prioritizing increased transparency regarding the compensation that PBMs receive from employer-sponsored health plans. Consistent with President Trump's April 15 executive order aimed at lowering drug prices, the DOL will explore regulatory options to ensure employers and plan sponsors have clear information about direct and indirect PBM fees.

2. Transparency in Coverage

The DOL is considering additional measures to enhance market transparency, particularly regarding pricing and cost-sharing information, to enable consumers to make more informed decisions about their health care coverage.

3. Retirement Plan Fiduciary Duties: ESG Factors

The DOL will review the extent to which retirement plan fiduciaries may consider environmental, social, and governance (ESG) factors when selecting investments and exercising shareholder rights. This could impact how plan sponsors approach investment decisions and practices.

4. Heat Injury and Illness Prevention

The DOL is developing standards to address heat-related injuries and illnesses in both outdoor and indoor work environments. The proposed standard would clarify employer obligations and outline specific protective measures, moving beyond reliance on the General Duty Clause. Public comments will be solicited to ensure the final rule is effective, feasible, and evidence-based. No target date has been set for finalization.

5. OSHA Standards Improvement Projects

The agenda includes ongoing efforts to streamline and modernize OSHA standards across various industries, including general industry, maritime, construction, and agriculture. These projects aim to remove duplicative or overly burdensome requirements, with a focus on deregulatory and burden-reducing actions.

6. Joint Employer Status Under the FLSA

The DOL is considering new regulatory guidance on when a business may be deemed a joint employer under the Fair Labor Standards Act (FLSA). The department has not issued such guidance since 2021 and anticipates a notice of proposed rulemaking in December. The goal is to guide enforcement and promote uniformity in court decisions.

7. Employee or Independent Contractor Classification

The DOL plans to revisit the criteria for classifying workers as employees or independent contractors under the FLSA. The department intends to rescind the Biden-era rule and issue a new notice of proposed rulemaking this month, signaling a deregulatory approach. In the interim, the DOL is following the approach set forth in Fact Sheet #13 (July 2008), as further informed by Opinion Letter FLSA 2025-2.

8. FLSA Exemptions for White Collar Employees

The DOL is reviewing the rules that define exemptions from minimum wage and overtime for executive, administrative, professional, outside sales, and computer employees. This item is on the "long-term action" agenda, indicating lower priority. The department is currently applying the 2019 earnings thresholds and reviewing the vacated 2024 rule.

9. H-2A Wage Rate and Program Requirements

The DOL is considering updates to the methodology for calculating prevailing wages for H-2A agricultural workers and proposes to rescind certain requirements from the Biden administration that have been challenged in court. These changes are intended to reduce burdens on agricultural employers.

10. Unemployment Insurance Fraud Prevention

The DOL announced the creation of a national database to combat unemployment insurance fraud, permanently expanding Labor's access to confidential claimant data. This initiative is tied to President Trump's March 20 executive order on eliminating information silos to prevent waste, fraud, and abuse.

Brian D. Pedrow, Shirley S. Lou-Magnuson, and Noah Jennings

First Circuit Rules National Bank Act Does Not Preempt Rhode Island State Law

On September 22, 2025, a panel of the First Circuit Court of Appeals issued a significant opinion in Conti v. Citizens Bank, N.A., holding unanimously that the National Bank Act does not preempt a Rhode Island statute requiring mortgage lenders to pay interest on mortgage escrow accounts.

This decision is one of the first major applications of the U.S. Supreme Court's 2024 Cantero v. Bank of America opinion (though lower courts have been applying Cantero) and could have far-reaching consequences for national banks that have historically relied on the OCC's preemption regulations to avoid complying with certain state consumer financial protection laws.

Holding: The First Circuit vacated the district court's dismissal of the plaintiff's claims, ruling that the Rhode Island statute regarding interest on escrow accounts is not preempted by the National Bank Act, and remanded the case for further proceedings consistent with the opinion.

Rationale: The court conducted the "nuanced comparative analysis" required by Cantero and determined that paying interest on escrow accounts does not significantly interfere with national banks' powers to make real estate loans or maintain escrow accounts. (The Cantero opinion instructed the court of appeals, in reaching its conclusion as to whether preemption applies or does not apply, to compare the Conti case to a litany of Supreme Court cases holding that the National Bank Act preempts state law and does not preempt state law.) The court also based its opinion on a provision of the Dodd-Frank Act which reaffirmed the "significant impairment" test of the Supreme Court Barnett Bank opinion.

Scope: This decision is binding precedent in the First Circuit (covering Rhode Island, Massachusetts, New Hampshire, and Puerto Rico) and persuasive authority elsewhere.

This opinion continues the trend with respect to National Bank Act preemption litigation. Although Conti deals narrowly with interest-on-escrow statutes, its reasoning suggests that national banks may be required to comply with a wide range of state consumer financial laws—unless there is an express statutory or regulatory preemption or an express conflict with federal law.

The Conti opinion means that national banks might be expected to follow the same state law requirements that currently apply to state-chartered banks, including: state interest-on-escrow laws, state-specific notice and disclosure obligations, and other consumer protection statutes regulating terms and conditions of credit products.

In light of this decision, national banks should immediately assess which state laws they may now need to comply with and update their compliance programs accordingly.

Since the Cantero opinion was rendered, our consumer financial services group at Ballard Spahr has been helping several national banks prepare for this exact scenario—identifying relevant state laws, performing multi-state surveys, and designing compliance strategies. This ruling underscores the urgency of those efforts.

Case Overview and Analysis:

Rhode Island General Laws § 19-9-2(a) requires banks operating in the state to pay interest on mortgage escrow accounts. John Conti, a Citizens Bank borrower, brought a putative class action lawsuit alleging that Citizens failed to pay such interest. The district court dismissed his case, finding the Rhode Island law preempted by the National Bank Act.

While Conti's appeal was pending, the Supreme Court decided Cantero, which clarified that preemption determinations must be based on a practical assessment of whether a state law "prevents or significantly interferes with" a national bank's powers, comparing the degree of interference to the body of precedent discussed in Barnett Bank v. Nelson and other cases dealing with National Bank Act preemption cited by the Supreme Court in Cantero.

The First Circuit held that the district court applied an overly broad preemption standard and failed to conduct the required nuanced analysis. After reviewing the relevant Supreme Court precedents, the court found no express conflict between the Rhode Island statute and federal law.

The First Circuit believed that the statute was not so unusual or burdensome as to deter customers or significantly impair bank operations.

Additionally, the court believed that Congress's decision in the Truth in Lending Act to require compliance with state interest-on-escrow laws for certain mortgages suggested that such laws are not inherently inconsistent with federal banking law.

The court also rejected the arguments that congressional silence, OCC inaction, or the risk of a "patchwork" of state laws should create a presumption of preemption, emphasizing that Dodd-Frank codified a limited preemption regime and explicitly disavowed field preemption.

The court vacated the district court's judgment and remanded the case for further proceedings, allowing Conti's claims to proceed.

The bank may decide to seek a rehearing en banc before of all of the active judges of the First Circuit or file a petition for a writ of certiorari in the Supreme Court. We implore the OCC to submit an amicus brief in connection with such further proceedings supporting the bank's position.

Because of the heavy reliance by national banks on the OCC's preemption regulations, we hope that the courts will apply the Conti opinion prospectively to transactions that occur some time after the opinion becomes final in order to give national banks a reasonable period of time to revise their documents, policies, and procedures to comply with non-preempted state law.

Looking ahead, two similar cases involving state interest-on-escrow laws are currently pending before the Second and Ninth Circuits. If those courts follow the First Circuit, the result may be a de facto nationwide requirement for national banks to reassess the state laws with which they comply.

We anticipate increased litigation and regulatory scrutiny in this area and are advising our national bank clients to act proactively. Now is the time to review your product terms and compliance framework to ensure they reflect evolving state law requirements.

We also note that while consumer groups may view the decision as a victory, the requirement for national banks to pay interest on mortgage loan escrow accounts may result in such banks increasing the interest rates and/or fees that they charge on mortgage loans.

One final positive note: The Conti opinion does not apply to state laws that regulate the payment of interest (as defined under OCC regulations) on loans. Under binding Supreme Court precedent, Marquette National Bank v. First of Omaha Service Corp., Section 85 of the National Bank Act authorizes a national bank to charge interest at the rate permitted by the law of the state where such bank is located.

Joseph J. Schuster, John L. Culhane, Jr., Ronald K. Vaske, Richard J. Andreano, Jr., and Alan S. Kaplinsky

Deregulation on the Horizon for Nonbank Financial Institutions

On September 29, 2025, FinCEN issued a Notice and Request for Comment (the Notice) on a proposed information gathering exercise – A Survey of the Costs of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Compliance (the Survey). Specifically, the Survey is intended to gather information on direct compliance costs incurred by nonbank financial institutions in AML/CFT compliance and, to the extent those costs overlap with other obligations, the amount directly attributable to AML/CFT compliance.

The Notice is directed to specific categories of nonbank financial institutions: Casinos and Card Clubs; Money Services Businesses; Insurance Companies; Dealers in Precious Metals and Stones; Operators of Credit Card Systems; and Loan or Finance Companies.

In total, FinCEN estimates there will be 279,715 respondents falling into these categories, with the vast number – approximately 230,000 – being Money Services Businesses. Given FinCEN's assumption that the survey will take approximately eight hours to complete, FinCEN estimates subject nonbank financial institutions to expend well north of two million hours providing the information sought. While compliance with the survey will be voluntary, FinCEN notes that "information gathered will help assess the cumulative impact of AML/CFT regulations and may inform efforts to adjust regulatory obligations and advance deregulatory proposals consistent with the executive orders of the Trump administration." It also states that "the data may also support the development of deregulatory rulemakings or guidance to reduce compliance burden without compromising the effectiveness of current AML/CFT frameworks." And, FinCEN makes clear that no information submitted will be used for any supervisory or enforcement purposes.

Plainly, and expressly, FinCEN is setting the stage for efforts to scale back nonbank financial institutions' compliance obligations, seeking comment on: the practical utility of compliance obligations, whether assumptions concerning compliance time-costs are accurate, ways to add efficiencies to the compliance process, ways information technology or other automated techniques can reduce manpower expended on compliance.

Comments will be accepted until December 1, 2025.

For ease of reference, we reproduce the proposed survey here:

What was the total estimated direct cost in calendar year 2024 for your institution for compliance with all programs mandated by the BSA and its implementing regulations?
Please specify which of the following areas your institution uses technological resources, including software, to assist with, as applicable:
- customer identification and verification procedures;
- identifying suspicious activity;
- currency transaction reporting or reports relating to currency in excess of $10,000 received by a trade or business;
- 314(a) information sharing
- Office of Foreign Assets Control (OFAC) compliance
Approximately what percentage of the total direct cost of AML/CFT compliance is attributable to the production of Suspicious Activity Reports (SARs), if applicable. These direct costs include costs associated with AML/CFT staff reviewing alerts, maintaining a transaction monitoring system, and investigating cases arising from alerts, whether or not they lead to the production of a SAR, among other things.
(OPTIONAL) If your institution is able to provide the following information without significant burden, please provide approximately what percentage of the total cost of AML/CFT compliance is directly attributable to, as applicable:
- Customer identification and verification procedures;
- Reporting requirements for suspicious activity reporting;
- Reporting requirements for currency transaction reporting and exemptions or reports relating to currency in excess of $10,000 received by a trade or business;
- Internal controls related to AML/CFT compliance program;
- Independent testing for compliance by internal personnel or an outside party;
- Training and staffing employees;
- 314(a) information sharing;
- Funds transfer record keeping;
- Monetary instrument recordkeeping;
- Special measures;
- Software;
- Additional financial institution-specific BSA recordkeeping obligations (e.g., monetary instrument logs, also known as negotiable instrument logs, for casinos; extension of credit, for casinos; additional records that dealers in foreign exchange must retain);
- MSB registration;
- Other third-party activities
What approximate percentage of the total cost of AML/CFT compliance is attributable to complying with OFAC regulations?
Does your institution conduct anti-financial crime activities or maintain systems designed to combat financial crime that are not directly required by the BSA or its implementing regulations? Examples include additional customer due diligence programs or the development and operation of a Financial Intelligence Unit. If so, what is the direct cost (not included in question 1) of these additional activities across all business lines of your institution in calendar year 2024. Separately, approximately what percentage of your institution's total operating expenses did these direct costs represent in calendar year 2024?
Please provide any available date or narrative comments for your institution regarding the extent to which the non-BSA driven expenditures (i.e., the costs referenced in question (6)) generate a substantial portion of either the overall suspicious activity, and/or of national AML/CFT priorities related threat activity, that is described in SARs, if applicable.
Please provide any available data or narrative comments on whether there are particular types of products, services, customers, or delivery channels where AML/CFT-required monitoring, reviews, or investigations that have generated limited useful information from your institution's perspective.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. Please click here to find out about Ballard Spahr's Anti-Money Laundering Team.

Terence M. Grugan

Ballard Spahr Event: Wage and Hour Update for Business

Arizona employers are being sued by individuals and groups of employees for alleged overtime and wage and hour violations. Please join us to learn how to protect your company from these expensive lawsuits and prepare for government investigations.

This seminar will update attendees on:

The marked increase of litigation over wage and hour issues and how your company can avoid being sued
How employers can efficiently review their classifications of employees as exempt or nonexempt from overtime
Address recordkeeping requirements for overtime and hours worked
How to effectively track hours for remote and hybrid worker
Avoiding and responding to state and federal investigations and considering self-reporting programs

Thursday, October 30, 2025
7:30 AM – 9:00 AM
Arizona Biltmore Golf Club
2400 Biltmore Estates Drive
Phoenix, AZ 85016

Register Here

Program Details
7:30 AM – 8:00 AM | Registration and Breakfast
8:00 AM – 9:00 AM | Program

CLE Credit: This program is approved for 1.0 CLE credits in CA, NJ, NY, and PA. 1.0 HRCI and SHRM credits are pending. The State Bar of AZ does not approve or accredit CLE activities for the MCLE requirement. This activity may qualify for up to 1.0 hours toward your annual CLE requirement for State Bar of AZ. Uniform Certificates of Attendance will be provided for the purpose of seeking CLE credit in other jurisdictions.

For more information, contact Meg Connolly at connollymr@ballardspahr.com.

Jay Zweig and Melissa Costello

Looking Ahead

The CFPB's Most Ambitious Regulatory Agenda Ever

A Ballard Spahr Webinar | November 4, 2025, 12 PM ET

Speakers: Alan S. Kaplinsky, Richard J. Andreano, Jr., Gregory Szewczyk, Kristen Larson, Robert T. Lieber, Jr., Aja D. Finger, Mudasar Pham-Khan, and Daniel Wilkinson

CaMBA – Legal Issues and Regulatory Compliance Conference

December 8-9, 2025 | Irvine Marriott Hotel, Irvine, CA

Employment Law Updates – How to Protect Yourself

December 9, 2025 – 11:00 AM PT

Speaker: Richard J. Andreano, Jr.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mortgage Banking Update - October 2, 2025

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Finance and Banking

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