Consumer Crossroads: Where Financial Services and Litigation Intersect

The Consumer Financial Protection Bureau (CFPB ) rescinded Bulletin 2015-05, RESPA Compliance and Marketing Services Agreements on October 7, 2020, stating that the bulletin did not provide the regulatory clarity necessary for compliance with the Real Estate Settlement Procedures Act (RESPA) and Regulation X. The CFPB also issued frequently asked questions (FAQs) to clarify when marketing services agreements (MSAs) are acceptable under RESPA.

We've been following PHH's longstanding challenge of the CFPB's imposition of a fine against it for alleged RESPA kickback violations, through which elemental questions regarding the Bureau's constitutionality were tested.

For more than an hour and half on Wednesday, May 24, lawyers for PHH Mortgage and the Consumer Financial Protection Bureau discussed, debated, and decried the CFPB’s authority before the full D.C. Circuit Court of Appeals. There was minimal discussion of the underlying RESPA claims that formed the basis of the CFPB’s $109 million dollar judgment obtained against PHH. The major debate focused on whether the CFPB’s single director leadership and the President’s limited, for cause removal of that single director violated the Constitution’s separation of powers clause. The parties debated, among other issues, (1) the diminishment, if any, of the President's ability to faithfully execute the laws; (2) the effect and nature of the for-cause removal provisions; (3) the single director structure v. multi-member commission structure; (3) the effect and nature of the Bureau's other structural features, such as budget & appropriations; and, (4) departure, if any, from historical traditions and ideals.