CFPB wins constitutionality issue on appeal but sees $109M PHH fine overturned

A court ruled that insulating the CFPB director from presidential will was constitutionally permissible

CFPB wins constitutionality issue on appeal but sees $109M PHH fine overturned
The president cannot fire the director of the Consumer Financial Protection Bureau at will, the US Court of Appeals for the D.C. Circuit has held, ruling that such a bar is constitutional.

The ruling overturns a November 2016 decision that allowed the president to remove the bureau director without proof of serious misconduct, Reuters reported.

“Congress’s decision to provide the CFPB director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will,” the court wrote.

The decision stems from a continuing lawsuit between the agency and mortgage servicer PHH Corp. over RESPA issues related to its former mortgage reinsurance activities.

The latest ruling reinstates the original decision which threw out the $109 million fine the bureau levied against the company when Richard Cordray was still agency director. That decision found that the bureau exceeded its bounds when it assessed the fine. Now, the appeals court has remanded the matter for further proceedings based on its legal guidance.

“The decision by the full D.C. Circuit Court of Appeals to uphold the panel’s ruling to overturn former Director Cordray’s decision under RESPA with respect to our former mortgage reinsurance activities, which includes vacating the $109 million penalty, is an important and gratifying outcome for PHH and the industry,” PHH  said in a statement.

The company also said it will continue to present evidence that mortgage insurers did not pay its affiliated reinsurers more than the reasonable market value.

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