$9 Million CFPB Settlement Under Military Lending Act – Why Should Mortgage Companies Care?
The Consumer Financial Protection Bureau (CFPB), on July 22, 2025, settled a case with a Texas-based company and a number of subsidiaries, ending litigation over alleged violations of the Military Lending Act (MLA) originally filed in 2021. Mortgage companies may ask why this case matters if the MLA generally does not apply to mortgage loans. Keep reading.
Key Terms of the Settlement
$5 million in restitution for affected servicemembers and their families.
$4 million civil money penalty to the CFPB’s victims relief fund.
Specific MLA compliance requirements.
Termination of a prior 2013 CFPB consent order – resolved as unrelated but highlighting ongoing oversight of repeat actors.
What Triggered the CFPB’s Action?
The CFPB’s allegations included that the company:
Issued loans with interest rates above the statutory percentage cap.
Required prohibited arbitration clauses in contracts with borrowers.
Failed to deliver mandatory disclosures.
Violated a previous consent order by a predecessor entity.
Why This Should Be on Your Radar
The case targeted a nonbank lender in a different industry, pawnshops, under a law that generally does not apply to mortgage loans, the MLA. But the regulatory themes apply more broadly.
For mortgage lenders, key takeaways include:
Protection for Servicemembers: Companies offering any form of credit must ensure robust compliance protocols are in place. Even if the MLA does not apply, the Servicemembers Civil Relief Act and other laws do.
Repeat Actor Risk: Regulatory history matters. The CFPB continues to monitor entities with prior consent orders.
Disclosure and Arbitration Risk: Prohibited clauses and missing disclosures are on the CFPB’s radar.
While early in the development of the Trump Administration’s CFPB, this settlement may signal a reinvigorated strategy of aggressive enforcement against products targeting or affecting certain populations, especially servicemembers. Mortgage companies must keep this in mind when finding ways to grow business.
Contact Troy Garris
Email: troy@garrishorn.com
Read the Final Judgment and Order here.