Maryland’s secondary mortgage market has been in turmoil since a disruptive 2024 court decision held that a purchaser of mortgage loans inherits the original lender’s obligations—including the obligation to obtain a Maryland Mortgage Lender license. Secondary market investors that acquire residential mortgage loans through a passive trust can breathe a sigh of relief now that Maryland has enacted its legislative fix to address the court decision and related guidance by the Maryland Office of Financial Regulation. Please read our Legal Update on the latest developments in Maryland.

Although the Fifth Circuit Court of Appeals vacated the Federal Trade Commission’s (“FTC”) Combating Auto Retail Scams Trade Regulation Rule (“CARS Rule”) on January 27, 2025, the FTC and state attorneys general continue to target the auto sales and lending industries through enforcement actions and legislation. Among those efforts, the California legislature is considering its own CARS Act. Read about these efforts in Mayer Brown’s Legal Update.

Consistent with expectations for lighter regulation under the Trump administration, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) indicated in a March 26, 2025 court filing that it intends to revoke an Interpretative Rule it issued in May 2024 that would regulate certain Buy Now, Pay Later (“BNPL”) products as credit cards for the purposes of the federal Truth in Lending Act (“TILA”).

As discussed in an earlier Mayer Brown blog post, the Bureau previously issued an Interpretative Rule clarifying that lenders who issue “digital user accounts” that allow consumers to access credit for retail purchases are considered “card issuers” who must comply with additional disclosure and substantive requirements under TILA and its implementing regulation, Regulation Z. Prior to the issuance of the CFPB’s Interpretive Rule, providers of what has become the “core” BNPL product in the US—a closed-end loan that does not bear a finance charge and is repayable in not more than four installments—generally took the position that their activities did not trigger Regulation Z compliance obligations. The Interpretive Rule, however, explained that certain Regulation Z requirements nevertheless apply where a credit card is involved, and characterized “digital user accounts” as credit cards.  The Interpretive Rule followed over three years of market research on the BNPL industry during which the CFPB determined that consumers often used BNPL as a substitute for conventional credit cards, and represented an attempt to close what it characterized as a regulatory loophole, notwithstanding various ways in which typical BNPL accounts differ materially from credit cards in the way in which consumers access credit.

Continue Reading CFPB Indicates That It Will Rescind Buy Now, Pay Later Interpretative Rule

In an unprecedented move, the Consumer Financial Protection Bureau’s (“CFPB” or “Bureau”) Acting Director is seeking to vacate the Bureau’s settlement with Townstone Financial (“Townstone” or the “Company”), which was entered by the US District Court for the Northern District of Illinois on November 7, 2024. In a press release, Acting Director Vought stated that the CFPB “abused its power, used radical ‘equity’ arguments to tag Townstone as a racist with zero evidence . . . to further the goal of DEI in lending via their regulation by enforcement tactics.”

Continue Reading CFPB Seeks to Vacate Townstone Redlining Settlement

The New York legislature has introduced no fewer than three separate bills in 2025 to license and regulate the business activities of providers of buy-now-pay-later (“BNPL”) products. The first quarter of the year has seen the introduction of Senate Bill 4606, Assembly Bill 6757, and lengthy budget bill Assembly Bill 3008, each of which would enact a similar, but not identical, “Buy-Now-Pay-Later Act.” If enacted into law, each of the three bills would require certain providers of BNPL credit to obtain a license from the New York Department of Financial Services (“NYDFS”).

BNPL products have experienced increasing popularity in recent years as an alternative to credit cards for small-dollar retail transactions. While there are differences between available BNPL programs, the most common BNPL model is an extension of credit repayable in four or fewer installments that does not carry any interest, origination fee, or other finance charges—although such products frequently charge other incidental charges such as late fees or insufficient funds charges. Providers historically have argued that products structured in this manner generally do not trigger cost-of-credit disclosure (and limited substantive) requirements under the federal Truth in Lending Act (“TILA”). That view was challenged recently with the May 2024 publication of a Consumer Financial Protection Bureau (“CFPB”) interpretive rule asserting that traditional four-installment BNPL loans with no finance charge may be subject to certain TILA requirements pertaining to credit cards if they are offered through a “digital user account” access model, but the CFPB has since indicated that it likely will rescind such guidance. Research conducted by the CFPB indicated that BNPL products are more likely to be used by consumers with higher levels of debt, lower incomes, and less liquidity than some competing products, which has been part of the impetus for regulatory action under a consumer protection rationale. Particularly in light of the CFPB’s rollback of its BNPL Interpretive Rule, states, like New York, may see a greater need to take a more active role in regulating the product.

Continue Reading New York Proposes to License Buy-Now-Pay-Later Lenders

Earlier today the Trump administration’s nominee to lead the Consumer Financial Protection Bureau (“CFPB” or “Bureau”), Jonathan McKernan, testified before the Senate Committee on Banking, Housing and Urban Affairs.  McKernan was most recently a member of the Board of Directors of the Federal Deposit Insurance Corporation and has also worked in private practice, in Congress, and at the Federal Housing Finance Agency.

During the hearing, news broke that the CFPB had moved to dismiss a number of pending lawsuits with prejudice.  Dismissing a case with prejudice is significant because it essentially prohibits the Bureau from filing the same claims against the defendant in the future.  These developments follow other moves the agency made to reverse prior actions, including filing a motion to withdraw an amicus brief it submitted in a lawsuit shortly before Trump’s inauguration.

Continue Reading McKernan Testifies before Senate Committee amidst Rollback of CFPB Actions

Mayer Brown has published a new edition of Licensing Link, a periodic publication that will keep you informed on hot topics and new developments in state licensing laws, and provide practice tips and primers on important issues related to state licensing across the spectrum of asset classes and financial services activities.

In this issue, we discuss the licensing trends and developments that consumer financial services providers should be anticipating in 2025, and address important announcements by the Maryland Office of Financial Regulation (“OFR”) in response to market concerns regarding licensing guidance for assignees of certain residential mortgage loans and installment loans released by the OFR in January. Check it out and subscribe to receive future issues directly.

Mayer Brown serves as a trusted advisor to our clients in the consumer financial services industry, a role that we cherish and constantly strive to improve.

In this report, we provide a snapshot of our 2024 consumer financial services representative engagements and how we helped industry participants navigate the terrain. It also provides links to thought leadership pieces that were developed throughout the year for additional information on topics. These representative engagements demonstrate how Mayer Brown helps clients navigate the complex world of consumer financial services. The report covers:

  • Regulatory, Compliance & Licensing
  • Enforcement & Investigations
  • Litigation
  • Financial Services M&A
  • Securitization & Structured Finance
  • Fintech & Payments
  • Cybersecurity & Data Privacy

The last page of the report also includes a collection of links to related Mayer Brown resources and publications. Access the report here.

There were positive developments last week in connection with the recently announced licensing requirements for assignees of residential mortgage loans and installment loans in Maryland — a proposed legislative fix, an extended enforcement deadline, and a clarifying exception from the requirement.

As we discussed in our Legal Update last month, the Maryland Office of Financial Regulation (OFR) asserted that assignees of residential mortgage loans — including certain “passive trusts” that acquire or obtain assignments of residential mortgage loans in Maryland — must become licensed in Maryland prior to April 10, 2025, unless the assignee is expressly exempt under Maryland law. The guidance reflected the OFR’s understanding of an April 2024 decision by the Appellate Court of Maryland in Estate of Brown v. Ward that any assignee of any residential mortgage loan is required to obtain a Mortgage Lender license, and an Installment Loan license is required if the mortgage loans are made subject to the Credit Grantor provisions, regardless of whether the loans are open- or closed-end extensions of credit.

That guidance has caused significant turmoil in the Maryland residential mortgage markets, with significant practical concerns about requiring passive trusts to obtain a license and with certain industry participants suspending the purchase of Maryland mortgage loans.

To address these concerns, the OFR worked with industry participants to develop proposed legislation, the Maryland Secondary Market Stability Act of 2025 — two identical bills, Senate Bill 1026 and House Bill 1516, introduced on February 17, 2025.

Continue Reading Update on Maryland Licensing for Loan Assignees

On Friday, the Trump administration installed Russell Vought, the recently-confirmed head of the Office of Management and Budget, as the new acting director of the Consumer Financial Protection Bureau (“CFPB” or “Bureau”).  Vought replaced Scott Bessent who served as the acting director of the Bureau for less than a week.  Vought quickly issued a notice directing staff to pause all agency activity.  The directive goes further than the similar directive issued by former Acting Director Bessent and notably instructs staff to “cease all supervision and examination activity” and to “cease any pending investigations.”  Significantly, it has been reported that today Vought instructed Bureau staff to “not perform any work tasks” at all. It has also been reported that the Bureau’s DC headquarters will be closed from February 10 through the 14th.

Continue Reading New Acting Director Installed at the CFPB