PHH Wins in Landmark Victory

Blog posted On October 13, 2016

After more than six months of litigation, the United States Court of Appeals for the District of Columbia Circuit ruled in favor of PHH in the PHH Corp vs. Consumer Financial Protection Bureau case.  An excerpt from the 110-page statement reads:

"This is a case about executive power and individual liberty. The U.S. Government's executive power to enforce federal law against private citizens [...] is essential to societal order and progress, but simultaneously a grave threat to individual liberty. The Framers understood that threat to individual liberty [...] no independent agency exercising substantial executive authority has ever been headed by a single person. Until now."

The Court dismissed a $109 Million Fine against the PHH Corp from 2014, ruling that the structural integrity of the Consumer Financial Protection Bureau delegates too much power to its single director.  The court asserts, the director of the CFPB is the “single most powerful official in the US Government, other than the president,” in terms of unilateral power.  Because of this ruling, CFPB Director Richard Cordray could have a replacement before the end of his term in July 2018. 

The case began when the CFPB alleged PHH violated the Real Estate Settlement Procedures Act by referring customers to mortgage insurers who then bought reinsurance from one of its units.  PHH objected to the charges and the first oral arguments took place for the DC Circuit Court of Appeals. 

Legal analysts predict this decision will encourage more companies to challenge the CFPB’s future enforcement.  The ruling causes further strife for an agency already facing restrictions or restructuring depending on the outcome of the election.  Pending a petition for en banc reconsideration, the final resolution of this case may be delayed for over a year. 

Sources: Rob Chrisman, Bloomberg, Politico, HousingWire