All Eyes on PHH/CFPB Court Battle

Next Tuesday will mark the official start of PHH’s appeals lawsuit against the CFPB when both sides meet before a panel of judges.  In the lawsuit, PHH claims that the CFPB and their Director Richard Cordray overstepped authority by overturning a $6.5 million fine imposed by an internal CFPB judge and deciding instead to impose a $109 million fine for accepting what the CFPB says were kickbacks from mortgage insurers.  PHH states in its lawsuit that the payments were a common practice at the time and that they ended the practice years before the CFPB was in existence, so the agency has no legal authority on the issue.

This past Tuesday, some industry eyebrows raised when the federal appeals court hearing the case told the CFPB to be ready to answer questions about their single-director governance structure  which PHH claims is unconstitutional.  

​The case clearly has massive industry implications, especially with a Presidential election looming.  Ted Cruz has previously introduced legislation to abolish the CFPB and Donald Trump and John Kasich are both on record saying over the top regulation is killing businesses.  Both Hillary Clinton and Bernie Sanders have praised the CFPB and have commented on supporting even broader jurisdiction for the agency.

​We’ll be keeping a close eye on this case, and the potential implications it could have for our lender members.