PHH declines to appeal CFPB constitutionality case to high court

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PHH Corp. is not appealing to the Supreme Court a case that questioned the constitutionality of the Consumer Financial Protection Bureau, ending a contentious four-year legal battle.

The Mount Laurel, N.J., mortgage lender and servicer notched a huge victory in January when the U.S. Court of Appeals for the D.C. Circuit threw out the CFPB's $109 million fine against PHH over an alleged kickback scheme. But the court ruled against the company's claim that the agency's single-director structure is unconstitutional.

PHH chose not to file a so-called "petition for cert" by a May 1 deadline to appeal the case to the Supreme Court, said Dico Akseraylian, a PHH spokesman.

PHH is the only party that could appeal the ruling on constitutional grounds, lawyers said.

The constitutional issue had long overshadowed the main thrust of PHH's case against the CFPB. The appeals court ruled that former CFPB Director Richard Cordray had erred in reinterpreting the Real Estate Settlement Procedures Act, which was a coup for the mortgage industry.

The court had ruled that the CFPB had violated due process by not providing PHH with notice of its new interpretation of Respa. It also found that the CFPB is subject to the three-year statute of limitations in administrative cases.

The PHH lawsuit dates to 2014 when Cordray overruled an administrative law judge that initially had fined the company $6.4 million.

The constitutionality of the CFPB has been put on the back burner since Republicans took control of the agency. Several lawsuits are winding their way through the courts questioning the constitutionality of an independent agency.

The D.C. Circuit had ruled 8-3 that having a single director lead a federal agency does not violate the constitution.

Practically speaking, the PHH case, in upholding the CFPB's constitutionality, means that the president can only fire a CFPB director "for cause," and cannot do so at will, as an earlier court ruling had claimed.

PHH is in the process of being sold to Ocwen Financial.

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RESPA Enforcement Dodd-Frank Richard Cordray CFPB PHH Mortgage