The case of mortgage lender PHH Corporation v. CFPB has moved to the D.C. federal appeals court, with a hearing scheduled for April 12, the Wall Street Journal reported over the weekend. Although this is not an ARM-related case, it does involve a significant challenge to the CFPB’s rule enforcement powers, which makes it very relevant to the industry.
The case began with a 2014 enforcement action against PHH. The company appealed the decision, accusing the CFPB of overly aggressive interpretation of the rules. CFPB Director Richard Cordray responded to the charges, but did not back down; in fact, he imposed a more significant fine than the one recommended by the administrative law judge in the case.
While many have publicly complained about Cordray’s wide interpretation of his agency’s scope of authority, the PHH lawsuit is the first serious challenge. A loss in court would bolster the many calls from industry groups and conservative lawmakers for a change in the bureau’s leadership structure.
Cordray has dismissed a host of criticism to date, including claims of human resource discrimination, wild budget overruns, consumer complaint portal errors, massive data collection initiatives, involvement in Operation Choke Point, and more.
Last December he challenged American Banker’s reporting on the CFPB complaint database, stipulating that there are some errors, but that those instances represent a comparatively small percentage of the number of records handled.
Many have pointed out the irony that the CFPB is holding industry to a standard that it apparently cannot meet itself.