The opening introduction and summary for PHH Corp. v. CFPB is enough to signal the direction the Columbia District Court of Appeals would take:
“This is a case about executive power and individual liberty. The U.S. government’s executive power to enforce federal law against private citizens – for example, to bring criminal prosecutions and civil enforcement actions – is essential to societal order and progress, but simultaneously a grave threat to individual liberty.”
The court has ruled that the single-director structure at the CFPB is unconstitutionally structured.
“With the for-cause provision severed, the president now will have the power to remove the director at will, and to supervise and direct the director,” the court said. “The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury.”
The court also ruled in favor of PHH in its argument that the CFPB had department from prior interpretations of RESPA in its decision, and disagreed with the CFPB’s stance that by going through an administrative process, it did not have to abide by RESPA’s three-year statute of limitations.
“The bureau respectfully disagrees with the court’s decision,” a CFPB spokesperson said. “The bureau believes that Congress’s decision to make the director removable only for cause is consistent with Supreme Court precedent, and the bureau is considering options for seeking further review of the court’s decision.
“In the meantime, as the court expressly recognized, the bureau will continue its important work. Congress has charged the bureau with ensuring that the markets for consumer financial products and services are fair, transparent, and competitive and with protecting consumers in these markets from unlawful practices. Today’s decision will not dampen our efforts or affect our focus on the mission of the agency.”
MBA President and CEO David H. Stevens said in a statement the association was “gratified” with the decision.
“MBA is gratified that the court has issued an extremely thoughtful opinion,” Stevens said. “It addresses all of the key issues raised by the PHH case, including the proper interpretation of the Real Estate Settlement Procedures Act (RESPA), the need for due process including reasonable statutes of limitations and the very constitutionality of the CFPB itself.”
“All that said, we recognize that the CFPB does important work to protect consumers and that this case is far from settled and expect the government to continue to litigate it. We will continue to fight on behalf of our members, particularly on the RESPA and due process issues, as they go to the heart of a core argument that MBA has been making for several years now – that lenders need clear, consistent and reasonable interpretations of the rules in order to be able to best serve their borrowers and contribute to a smoothly functioning real estate market.”