“Probably CFPB launched the lawsuit after it established that there was a legal and factual basis for the case,” writes Valderrama. “Apparently that was not the case. Now, the current CFPB leadership under the second Trump government, in an act of legal Hara-Kiri who would make a Samurai-Blush, falls on the proverbial sword and expresses that the court case was missing a legal or factual basis.”
Valderrama writes that although “it is unacceptable for government agencies to focus on people or entities due to protected speech” nor his court, nor the seventh circuit, have tackled the argument of the first amendment of the defendants. “That is why that issue was not assessed.”
Townstone Defense Attornneys respond
Townstone Financial Defense Attorneys told Housing They are “deeply disappointed about the decision of the judge, but respect it.”
“We believe that his decision does not fully reflect the actual facts of the case,” they said. “However, a critical development underlines the injustice with which Townstone is confronted; acknowledged the CFPB’s own internal investigation that Townstone had no discriminatory practices and instead was the target of his political speech.
“This extraordinary admission by the CFPB emphasizes serious concern about the reach of the regulations and the armament of enforcement actions against protected speech – issues that affect the core of fairness in our industry.”
Defense lawyers added that they are committed to advocating reforms to “prevent similar challenges for other companies” and “to ensure that regulatory actions are based on evidence, not as political agendas.”
Case -background
The original case came from a CFPB complaint of July 2020 and claimed that Townstone is concerned with practices that illegally discouraged potential black applicants to request mortgage loans.
The moment the complaint lodged, the CFPB argued that such a speech – used in advertising that generated up to 90% of the company’s mortgage leaders – was not protected by the first amendment.
The agency claimed that only 1.4% of Townstone’s loan applications came between 2014 and 2017 from black applicants – compared to 9.8% for competitors.
The CFPB leadership that Trump led by Trump later reversed the course and claimed that the case was politically motivated and that the agency had abused its authority by using AI-driven software to analyze 78 hours of radio content.
The CFPB – now installed under the leadership by the second Trump administration – tried to invalidate its own regulation in a rare legal maneuver. The relocation attracted sharp criticism of civil rights and consumer groups, who said that undoing the agreement would form a “dangerous and destabilizing precedent.”
Those groups – including the ACLU” National Fair Housing Alliance” Consumer Federation of America and the National Consumer Law Center – has submitted a friend of the court against the reversal of the CFPB.
Valderrama’s statement corresponds to their opinion that the agency cannot randomly reverse a negotiated scheme, even under new leadership.
The retreat of the CFPB from several enforcement cases has led the criticism within the agency.
CFPB enforcement chief Cara Petersen resigned on Tuesday – writing in a farewell email that the current leadership “is not going to maintain the law in a meaningful way.”
