The legal battle between PHH and the CFPB focuses primarily on whether the CFPB is a constitutionally structured independent agency – a decision on that issue is sure to have widespread implications for the entire financial services industry. There is, however, another issue which also carries a tremendous amount of weight for a major industry. The mortgage finance industry is anxiously awaiting the DC Circuit’s ruling regarding the appropriate interpretation of Section 8(c) of the Real Estate Settlement Procedures Act (RESPA).
Ryan McKenna, general counsel for Radius Financial Group, expects the court’s ruling to “constitute a net benefit to the [mortgage] industry.” In particular, McKenna believes that the court will affirm that Section 8(c)(2) is the “exception to RESPA’s general prohibition against fees and kickbacks.” He added that he is optimistic that even if the court concludes that the CFPB’s structure is constitutional, the court will likely uphold the plan meaning of RESPA and mandate that changes to formal agency guidance be subject to notice and comment rulemaking standards.
h/t Brena Swanson at Housing Wire