The CFPB filed a joint motion seeking relief from a stipulated final judgment against Townstone Financial, a small mortgage company with about 10 employees that operates a radio program. The agency is asking the court to dismiss the case and refund the monetary penalty imposed on the company after what officials described as years of harassment based on statistical disparities rather than actual discriminatory conduct.
The enforcement action originated from a "redlining screen" that initially flagged 22,000 companies based on lending statistics, which the CFPB then narrowed down through what the agency called "qualitative research." Townstone was targeted solely for perceived racial disparities in its mortgage applications, specifically what the CFPB termed a "shortfall" of just 31 applications from "majority-minority" areas out of 876 total applications over three years. "CFPB abused its power, used radical 'equity' arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them," said Acting Director Russ Vought.
According to the agency's press release, the CFPB threatened Townstone with potential penalties of $28,906 per day for four years—totaling over $42 million—for alleged civil rights violations. The investigation was not prompted by consumer complaints but was driven by statistical analysis that the current leadership characterizes as quota-style enforcement. The company ultimately settled to avoid the costly litigation, despite what the CFPB now acknowledges was a lack of evidence of discriminatory intent or business practices.
The case took an unusual turn when the CFPB used audio mining software to analyze Townstone's radio content, identifying 16 minutes out of nearly 79 hours (.33%) that officials deemed "disconcerting" for discussions of local crime, political issues, and law enforcement support. Senior Advisor Dan Bishop called this "a flagrant misuse of government resources to destroy a small business that did nothing wrong" and said the targeting was based on "protected political speech." A consumer survey commissioned by Townstone found that no Black respondents took offense to the radio content.
"This was a flagrant misuse of government resources to destroy a small business that did nothing wrong. For the crime of protected political speech, this firm was targeted and harassed for years by this rogue agency. We are righting this wrong and protecting the First Amendment," said Senior Advisor Dan Bishop. The agency's internal documents reportedly showed that former Director Rohit Chopra had identified "racial equity" as a "cross-cutting priority," and Townstone was internally tagged as important to that initiative.
The CFPB's motion represents a stark reversal from previous enforcement priorities and signals a significant shift in the agency's approach to fair lending cases. The case raises questions about the use of statistical disparities as evidence of discrimination and the extent to which agencies can consider protected speech in enforcement decisions. The joint motion indicates both the agency and Townstone agree the settlement should be vacated.
The court filing includes a Rule 60(b) motion for relief from judgment, along with supporting memoranda and declarations from agency officials. If granted, the motion would effectively nullify one of the CFPB's fair lending enforcement actions and could set a precedent for how the agency evaluates statistical evidence in future cases. The outcome may influence whether other companies subject to similar statistical-based enforcement actions seek relief under the new leadership.