A coalition of fair housing and economic advocacy groups sued the Consumer Financial Protection Bureau (CFPB) and acting director Russell Vought on Wednesday, seeking to block a Trump administration-backed rule they say would weaken longstanding protections against lending discrimination.
The lawsuit, filed in federal court in Washington, D.C., challenges changes made last month by the CFPB to Regulation B, which implements the Equal Credit Opportunity Act (ECOA), a 1974 civil rights law designed to prevent discrimination in lending.
According to the complaint, the CFPB’s rule reverses nearly 50 years of federal fair lending policy.
The plaintiffs include the National Fair Housing Alliance, Rise Economy and two private firms focused on fair lending compliance: BLDS LLC and artificial intelligence company SolasAI. They argue the rule would make it harder to hold banks and other lenders accountable for practices that disproportionately harm Black borrowers, women and other underserved groups.
Disparate impact, credit deterrents and SPCPs
The lawsuit focuses on three major changes.
First, the rule eliminates disparate impact liability under the ECOA, a legal standard that has long allowed regulators and borrowers to challenge lending policies that disproportionately harm protected groups, even without evidence of intentional discrimination.
The plaintiffs argue that these protections are especially important as lenders increasingly rely on automated underwriting, artificial intelligence and targeted digital advertising. Without disparate impact standards, the lawsuit claims, algorithms could reinforce historic patterns of discrimination.
Second, the complaint challenges changes to rules governing “discouragement” in lending, meaning actions or marketing practices that deter people from applying for credit. The plaintiffs say the revised rule narrows what counts as unlawful discouragement, making it harder to pursue cases tied to redlining or discriminatory advertising.
The lawsuit cites past federal enforcement actions involving branch placement, selective advertising and outreach practices that allegedly excluded communities of color. It also points to recent CFPB research, which found that Black small-business applicants were less likely than white applicants to receive encouragement to apply for loans.
Third, the lawsuit argues the rule would effectively dismantle Special Purpose Credit Programs (SPCPs), which lenders use to expand access to credit for underserved borrowers. Plaintiffs say the CFPB’s changes would make these programs nearly impossible for lenders to operate in a for-profit manner.
‘Deliberate dismantling’ of protections
The CFPB said when issuing the rule that it was complying with a January 2025 executive order from President Donald Trump, which directs agencies to “coordinate the termination of all discriminatory programs, including illegal DEI and ‘diversity, equity, inclusion, and accessibility’ (DEIA) mandates, policies, programs, preferences, and activities in the Federal Government, under whatever name they appear.”
The plaintiffs also accuse the CFPB of violating the Administrative Procedure Act (APA) by failing to adequately justify the rule changes or properly consider evidence and public comments warning that the changes could increase discrimination.
“This is the deliberate dismantling of 50 years of legal jurisprudence, regulatory guidance, and bipartisan consensus that lending discrimination has no place in America,” Lisa Rice, president and CEO of the National Fair Housing Alliance, said in a statement. “The statute did not change. The legal decisions did not change. Washington’s commitment did.”
Rice said that the CFPB’s reversal is “a continuation of this Administration’s efforts to gut fair housing and lending protections,” and that the change to the rule will result in roadblocks to credit access and a less productive economy.
Paulina Gonzalez-Brito, CEO of Rise Economy, said that the CFPB’s move ignores “decades of precedent.”
“The CFPB was created to protect consumers and small businesses from financial abuse and discrimination, and this final Reg B rule would do real harm, setting us back in our collective efforts to ensure that all families and small businesses have a fair chance to achieve the American Dream,” Gonzalez-Brito said. “The CFPB needs to follow the law and return to its core mission of protecting consumers and small businesses.”
“This rule undermines one of the nation’s core civil rights protections in lending and will lead to more discrimination in access to credit,” said Skye Perryman, president and CEO of Democracy Forward, one of the legal teams representing the plaintiffs. “At a time when communities across the country continue to face barriers to homeownership, small business lending, and economic opportunity, the CFPB should be strengthening protections against discrimination, not dismantling them.”
“The CFPB is upending decades of consistent regulatory implementation of ECOA by dismantling some of the statute’s fundamental protections. The court should reject the CFPB’s arbitrary and unsupported rule, which is inconsistent with the plain text of ECOA,” said Allison Zieve, director of Public Citizen Litigation Group, another legal team representing the plaintiffs.
The CFPB did not immediately respond to HousingWire‘s requests for comment.
Additionally, the lawsuit challenges the authority of Vought, arguing he has not been lawfully appointed to lead the agency because he has not been confirmed by the Senate. Due to Vought not being officially appointed, the plaintiffs argue that the rule is invalid.
Trump had previously nominated Jonathan McKernan to lead the bureau on a permanent basis, but he was never confirmed and Vought remained as acting director. In October 2025, McKernan was appointed as under secretary for domestic finance at the U.S. Department of the Treasury.
