CFPB Medical Debt Rule Could See Delay, Reconsideration – NMP Skip to main content

CFPB Medical Debt Rule Could See Delay, Reconsideration

Jan 23, 2025
CFPB Final Rule Banning Medical Debt From Credit Reports Potentially Delayed
Associate Editor

President Trump orders agencies to potentially reopen comments on new rules

The Consumer Financial Protection Bureau’s (CFPB) new rule banning medical debt from credit reports could see a delay and further reconsideration. The rule was published Jan. 14 in the Federal Register and had been set to take effect March 17. 

As of Jan. 20, however, following his inauguration, President Trump signed an executive order placing a “regulatory freeze pending review” on all executive departments and agencies.

Specifically, the order calls for agencies to “consider postponing for 60 days from the date of this memorandum the effective date for any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect.” During those 60 days, agencies are to consider opening new comment periods and, if necessary for further review, to delay rules beyond the 60-day period.

Some welcomed the potential delay and reconsideration, including Capio, a health care receivables purchaser, which noted the CFPB’s final rule could have “significant unintended consequences.”  

“Capio is deeply concerned about the potential implications of the CFPB’s final rule to prohibit the inclusion of medical debt on consumer credit reports,” said Mark Detrick, Capio’s CEO. “In the interests of patients and providers, we believe this rule could have significant unintended consequences that extend beyond its goals.”

What consequences, exactly? Detrick noted the removal of medical debt from credit reports "risks creating a fragmented credit reporting system that reduces transparency and complicates lenders’ ability to assess creditworthiness" and could discourage consumers from paying medical debts, "increasing financial strain on health care providers and driving them toward litigation to recover unpaid bills.”

Those concerns have been echoed by others in the tens of thousands of comments the CFPB received during the rulemaking process. 

Still, the CFPB said it found that medical bills on a person’s credit report are “a poor predictor of whether they will repay a loan, and contribute to thousands of denied applications on mortgages that consumers would be able to repay.”

The consumer watchdog stated specifically that it expected the rule to result in an additional 22,000 mortgages annually.

The CFPB also claimed the rule would remove some $49 billion in medical bills from credit reporting for 15 million Americans, and that those with medical debt on their credit reports could see their credit scores rise by an average of 20 points. 

About the author
Associate Editor
Published
Jan 23, 2025
Fannie Mae AI Governance Deadline Arrives Aug. 6

Seller/servicers using artificial intelligence in origination or servicing must have formal policies, oversight, and vendor controls in place

Condo Review Deadline Puts Lenders On The Clock

Fannie Mae and Freddie Mac will eliminate abbreviated project reviews for condo applications dated on or after Aug. 3

TRUE Releases AI Governance Guide Ahead Of Fannie Mae Deadline

Guide focuses on tracing mortgage data from borrower documents through AI validation, human review, and final LOS entry

AD Mortgage Warns Condo Eligibility Changes Could Restrict Conventional Financing

Wholesale lender cites internal loan data to urge regulators to monitor whether new condominium eligibility standards reduce access to conventional financing

CHLA Says Direct Payments Are Key To Small FHA Loans

The lender group says mortgages below $100,000 routinely lose money, while LO compensation rules could prevent federal incentives from reaching originators

Solidifi Clears FHA Certification For UAD 3.6 Integration

The appraisal management company says it is the first to complete certification for FHA’s modernized EAD platform, giving lender clients an early path toward implementation