On October 29, the National Urban League (NUL) and the Massachusetts Association of Community Development Corporations (MACDC) filed suit in the U.S. District Court for the District of Massachusetts challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) April 22, 2026 final rule amending Subpart A of Regulation B, which implements the Equal Credit Opportunity Act (ECOA). The complaint names the CFPB and Acting Director Mark Paoletta as defendants and seeks declaratory and injunctive relief, including vacating the final rule.

The lawsuit follows a similar challenge filed in May by the National Fair Housing Alliance, Rise Economy, BLDS, LLC, and SolasAI (discussed here). Like that case, the new complaint targets the final rule’s three principal changes to Regulation B: the elimination of disparate-impact liability under ECOA; the narrowing of protections against discouraging prospective applicants; and new restrictions on special purpose credit programs (SPCPs) offered by for-profit lenders.

The Complaint’s Key Allegations

The plaintiffs allege that the CFPB acted arbitrarily and capriciously in violation of the Administrative Procedure Act by failing to provide reasoned explanations for the changes, respond meaningfully to significant comments, consider substantial reliance interests for both lenders and borrowers, or adequately assess the rule’s costs and benefits. Among other procedural objections, the plaintiffs contend that the CFPB provided an inadequate 32-day comment period, failed to comply with the Regulatory Flexibility Act and the Small Business Regulatory Enforcement Fairness Act, and did not meaningfully consult with other federal agencies as required by the Dodd-Frank Act. According to the complaint, the CFPB received approximately 64,500 comments on the proposed rule, of which 90% opposed the proposed modifications, but made no changes to the final rule.

The complaint also alleges that the rule’s revised discouragement provisions conflict with ECOA and exceed the Bureau’s statutory authority. The final rule limits discouragement to spoken or written words or visual images, rather than other acts or practices, and provides that encouragement directed toward one group does not constitute discouragement toward another. The plaintiffs argue that the changes improperly exclude evidence involving branch locations, advertising, community outreach, and other pre-application conduct and may make it more difficult to address redlining and targeted digital advertising.

The new lawsuit places particular emphasis on the effects of the final rule on nonprofit and community-development organizations. NUL alleges that the changes will require it and its affiliates to revise counseling and training materials, divert resources, and address reduced access to affordable credit. MACDC similarly alleges that its member organizations will face increased compliance and operational costs, reduced opportunities to partner with for-profit lenders, and greater demand for lending and technical assistance. The complaint identifies previously available SPCPs in Massachusetts and alleges that lenders are no longer extending new credit through those programs because of the final rule.

Finally, the plaintiffs allege that then-Acting Director Russell Vought lacked authority under the Federal Vacancies Reform Act and the Constitution to issue the proposed and final rules. They contend that the Act did not authorize his designation because former Director Rohit Chopra was removed by the President rather than dying, resigning, or becoming unable to perform his duties. The complaint therefore argues that the final rule is void.

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