On October 29, a national civil rights organization and a trade group representing Massachusetts community development organizations filed a complaint in the U.S. District Court for the District of Massachusetts against the CFPB and its acting director, Mark Paoletta. The action challenges the CFPB’s April 22 final rule amending Regulation B under the APA, the Appointments Clause, and the Federal Vacancies Reform Act. As previously covered by InfoBytes, the CFPB proposed the amendments in a rule published on November 13, 2025, and finalized them largely as proposed (covered here), with an effective date of July 21. According to the complaint, the rule: (i) “purports to remove disparate-impact liability from ECOA’s prohibition on discrimination — liability that protects against unjustified discriminatory practices and that has been a critical tool in dismantling discriminatory barriers to credit”; (ii) “dramatically undermines longstanding protections against lenders’ discouragement of prospective applicants — protections that prohibit discrimination before a person has formally applied for credit”; and (iii) “purports to prohibit for-profit lenders from offering certain types of Special Purpose Credit Programs (SPCPs) — programs intended to expand access to credit to underserved borrowers facing obstacles to credit.”

The plaintiffs allege that the rule is arbitrary and capricious and procedurally defective, citing, among other things, inadequate responses to the roughly 64,500 comments received during the short 32-day comment period (more than 90 percent of substantive, non-duplicative comments opposed the changes, according to the complaint), a failure to consider lenders’ and borrowers’ reliance on the stable framework created by Regulation B that has existed for the last 50 years, a deficient Dodd-Frank Act cost-benefit analysis, and a failure to consult prudential regulators as 12 U.S.C. § 5512(b)(2)(B) requires. They also assert the discouragement changes are contrary to ECOA and exceed the CFPB’s authority by creating what they describe as “safe harbors,” citing 28 U.S.C. § 2072. Separately, the plaintiffs claim then-Acting Director Russell Vought, who signed both the proposed and final rules, was serving in violation of the Constitution and the Federal Vacancies Reform Act of 1998. Alleging that for-profit lenders have stopped extending new credit under SPCPs in the communities the plaintiffs serve, the complaint seeks declaratory relief, vacatur, a finding that the rule is void, and costs and attorneys’ fees. A separate challenge to the rule was filed earlier in the U.S. District Court for the District of Columbia (covered by InfoBytes here).