A closer look at DC Circuit’s CFPB Decision

Earlier this week, a three-judge panel held that the CFPB is unconstitutionally structured and that the agency violated due process principles when it retroactively applied its RESPA interpretations while pursuing an enforcement action against mortgage lender, PHH. The court vacated the Bureau’s ruling and remanded the case to the CFPB for reconsideration consistent with the DC Court’s opinion.

DC court finds CFPB structure unconstitutional

A three-judge panel on the DC Circuit Court of Appeals declared the CFPB structure unconstitutional. According to the panel, the Bureau violated the Constitution’s separation of powers doctrine because its sole director, Richard Cordray, is not sufficiently accountable to the president. In its decision, the court explained that CFPB’s single director leadership structure is unlike other independent agencies that are not accountable to the president because their leadership is checked by multiple commissioners or board members.

Oral arguments in PHH appeal

PHH oral arguments

On April 12, 2016, the US Circuit Court of Appeals for the District of Columbia held oral arguments in PHH Corporation v. Consumer Financial Protection Bureau (CFPB). PHH, a mortgage lender, is challenging the CFPB’s constitutionality as well as the Bureau’s interpretation of the Real Estate Settlement Procedures Act (RESPA).

The case began in January 2014 when the CFPB alleged that PHH had violated the anti-kickback provisions in Section 8 of RESPA. PHH contested the CFPB’s charges and brought