CFPB Granted Rehearing in PHH Case: Future of CFPB and Its Director Remains Unsettled

The D.C. Circuit Court has granted the petition from the Consumer Financial Protection Bureau (CFPB) for a rehearing en banc (refers to a session heard before all the judges of the Court) in the PPH case and ordered a briefing that culminates in oral argument on May 24. As you may recall, back in October the District of Columbia Circuit Court ruled in favor of PHH Corporation, a mortgage lender, against the CFPB.

CFPB challenges the D.C. Circuit panel’s decision that a single Director of the Bureau, removable only for cause, is unconstitutional and that the purchase of reinsurance at fair market value does not violate RESPA (Real Estate Settlement Procedures Act). The court specifically requested briefs on the constitutional issues and whether the Administrative Law Judge was constitutionally appointed.

While the United States supports rehearing of the constitutionality question of the Bureau’s structure, the U.S. takes no position on this issue or on the issue of whether reversing the Department of Housing and Urban Development (HUD) precedent and retroactively applying the Bureau’s interpretation of RESPA violates due process.

We may have a decision from the D.C. Circuit in the first part of 2018 in this matter. In the meantime, the order granting the rehearing cancels the judgment of the prior D.C. Circuit panel’s order from October.

It remains unclear if President Trump will attempt to remove the Director despite the rehearing. It is uncertain if Congress will use its authority to roll back recent and pending CFPB regulations under the Congressional Review Act of 1996.

A number of bills are also in Congress that would either eliminate the CFPB or give Congress control over the Bureau’s budget.

So the future of the CFPB and its Director remain in question for now. Stay tuned as we continue to watch the proceedings!