Publication

"Which Constitutional Question Will Decide PHH v. CFPB?"
 

The May 24, 2017, oral argument in PHH Corp. Consumer Financial Protection Bureau (“CFPB” or “Bureau”) before the U.S. Court of Appeals for the D.C. Circuit, sitting en banc, sent strong signals that the Court is likely to decide this case on the Constitutionality questions, rather than  the statutory ones. Discussion of the statute of limitations and the Real Estate Settlement Procedures Act (“RESPA”) issues in the case, themselves of weighty legal and practical consequence for the mortgage industry, occupied but a few minutes at the end of the oral argument (with a brief PHH plea for reinstatement of the three-judge panel’s RESPA decision in its favor).

While commentators have focused on the Constitutionality of the CFPB’s structure, there is a real question of whether the deciding Constitutionality issue in PHH will be:

  1. the CFPB’s single-director structure is consistent with the Constitution; or
  2. whether the administrative law judge (“ALJ”) who heard the case was an “inferior officer” under the  law  and  thus  appointed  in  violation  of the Appointments Clause (the question in Securities &  Exchange Commission (“SEC”) v. Lucia, argued immediately before PHH).
Finally, perhaps the even more important practical question is whether the Court will render its decision in time to have a significant impact on the date when Richard Cordray will leave his post as CFPB Director.

 

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