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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

PHH "Extremely Gratified" By CFPB Dismissal

Closely watched RESPA litigation

June 8, 2018

By Mortgage Daily staff

PHH Corp. is celebrating the Consumer Financial Protection Bureau's dismissal of a closely watched case involving alleged violations of the Real Estate Settlement Procedures Act.

At issue are reinsurance payments collected by the Mount Laurel, New Jersey-based company and four of its subsidiaries that allegedly violated RESPA.

In 2014, an administrative law judge recommended that PHH disgorge more than $6 million as a result of its alleged activities even though the Department of Housing and Urban Development issued a letter in 1997 indicating that captive reinsurance arrangements are permissible as long as lenders provide services for the fees.

But then-CFPB director Richard Cordray saw the penalty as inadequate and issued an order requiring that PHH pay $109 million.

PHH responded by appealing the constitutionality of the CFPB's structure.

Last year, under the Donald Trump administration, the Department of Justice issued a friend-of-the-court brief challenging the CFPB's structure. This past January, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision declaring the CFPB is constitutional. But the court said PHH could still challenge the $109 million fine.

On Thursday, CFPB Acting Director Mick Mulvaney filed a dismissal in the case.

Dorsey & Whitney LLP Partner Joseph Lynyak III noted that the dismissal brings an end to the episode.

"The en banc decision of the DC Court of Appeals validated the structure of the CFPB but did not address the merits of PHH legal position (which PHH had won in the earlier three-judge panel's decision) that it had complied with decades old interpretations of Section 8(c) of RESPA," Lynyak said in a written statement. "In light of these divergent results, dismissing the PHH enforcement action actually reflects the outcome of the PHH litigation."

Lynyak added that the reduction or emanation of  the $109 million penalty will help facilitate Ocwen Financial Corp.'s planned acquisition of PHH.

For its part, PHH is ecstatic about the dismissal.

"We are extremely gratified to have this matter fully resolved as a result of Acting Director Mulvaney's decision to dismiss this case," PHH said in a news release issued late Thursday. "Today's order is consistent with our long-held view that we complied with RESPA and other laws applicable to our former mortgage reinsurance activities in all respects."

Case No. No. 15-1177, decision on Jan. 31, 2018 (U.S. Court of Appeals for the District of Columbia Circuit).


Appeals Court Finds CFPB is Constitutional (Jan. 31, 2018)
A federal appeals court has ruled in a closely followed case that the Consumer Financial Protection Bureau's structure is constitutional.

DOJ Files in Opposition to CFPB (March 17, 2017)
The Department of Justice has weighed in on the lawsuit filed by PHH Corp. against the Consumer Financial Protection Bureau. At issue is the constitutionality of the bureau's structure.

CFPB Wins Round in PHH Lawsuit (Feb. 17, 2017)
The Consumer Financial Protection Bureau has won a round in a contentious lawsuit that was previously filed by PHH Corp.

Implications of PHH v. CFPB Decision (Oct. 17, 2016)
The attorney who represented PHH Corp. in its lawsuit against the Consumer Financial Protection Bureau talked about the implications from last week's appellate court decision.

Mortgage Industry Wins Huge Legal Battle With CFPB (Oct. 11, 2016)
A federal appeals court has ruled in favor of PHH Corp. in an action challenging a Consumer Financial Protection Bureau order and its structure.

Implications of PHH v. CFPB (April 18, 2016)
If  PHH Corp. wins its appeal of a Consumer Financial Protection Bureau order, it could impact both the regulator's structure and other Real Estate Settlement Procedures Act issues.

Legal Experts Weigh In on CFPB Action Against PHH (June 12, 2015)
Several legal experts have weighed in on the Consumer Financial Protection Bureau's decision to order PHH Corp.  to pay $100 million more than was recommended by an administrative law judge.

PHH Latest Target in M.I. Kickback Actions (Jan. 29, 2014)
PHH Corp. and four of its subsidiaries are facing regulatory actions for allegedly operating an illegal mortgage insurance kickback scheme beginning nearly two decades ago.

PHH profile

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