Under President Trump, the Consumer Financial Protection Bureau has dropped nearly a dozen enforcement cases brought during the Biden administration, ending lawsuits against banks and lenders for a variety of financial practices that the watchdog agency no longer considers illegal.

But on Wednesday, the bureau went a step further: It is seeking to give back $105,000 that a mortgage lender paid to settle racial discrimination claims last fall.

In an especially strange twist, the case — against Townstone Financial, a small Chicago-based lender — was brought during Mr. Trump’s first term by Kathleen Kraninger, the director he appointed to run the consumer bureau.

Russell Vought, who became the agency’s acting director last month, said it had “used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them.”

In its filing asking the U.S. District Court for the Northern District of Illinois to set aside the settlement it approved in November, the bureau said it had found “significant undisclosed problems” in its handling of the lawsuit, which the new leadership called an “unmerited” complaint that violated the defendants’ First Amendment free-speech rights.

The case began in 2020 when the consumer bureau accused Townstone of redlining and breaking fair-lending laws by discouraging residents living in majority-Black neighborhoods from applying for its housing loans. It homed in on comments made during the company’s radio show and podcast, “The Townstone Financial Show,” saying they were intended to rebuff Black borrowers or those seeking to buy homes in certain neighborhoods.

Show guests and hosts — including Barry Sturner, Townstone’s chief executive — described Chicago’s South Side as a “jungle” and a “war zone” that became a “hoodlum” hive on weekends, according to the bureau’s legal complaint. Statistical analyses of Townstone’s mortgage loan applications showed that it drew far fewer from majority-Black neighborhoods than its lending peers, the agency said.

A federal court in Chicago dismissed the bureau’s lawsuit in 2023, ruling that the Equal Credit Opportunity Act protected only actual loan applicants, not prospective ones. But the bureau appealed the decision, and a three-judge panel of the U.S. Court of Appeals for the Seventh Circuit reversed it, finding that the law did protect prospective applicants for credit.

When Townstone settled the case, Mr. Sturner said he had done so to avoid the cost and toll of continuing the legal fight. “My family and I are relieved to finally put this nightmare behind us,” he said in a statement.

Mr. Sturner’s lawyers joined the consumer bureau in asking the federal court to vacate the settlement deal.

“Now we know that C.F.P.B. knew — or should have known — it had no case and targeted Townstone for its speech,” said Steve Simpson, a lawyer at the Pacific Legal Foundation who represents Mr. Sturner. “Justice demands that this settlement be vacated.”

The White House did not respond to a request for comment.

Christine Chen Zinner, a senior lawyer at Americans for Financial Reform, a progressive advocacy group, called the consumer bureau’s attempt to overturn the settlement “bananacakes.” The appellate panel’s unanimous decision that the fair-lending law applied was a clear signal that the case had merit, she said.

“Literally dropping the settlement sends a clear green light to businesses that discriminatory conduct is acceptable,” she said.

Norbert Michel, the director of the Center for Monetary and Financial Alternatives at the Cato Institute, a libertarian think tank, praised the consumer bureau’s about-face.

Citing the lawsuit’s focus on racial disparities between Townstone’s mortgage origination statistics and other lenders’, Mr. Michel wrote on social media, “Government agencies should not be in this business — and it is not accurate to call it regulation.”