CFPB Ruling Adds New Front in Administrative Law Fight
Richmond partner Alan Wingfield was quoted in a June 11 Law360 article about how Consumer Financial Protection Bureau Director Richard Cordray’s June 4 decision upholding an administrative ruling against PHH Mortgage Corp. and significantly increasing the firm’s penalty highlights industry concerns over the bureau’s appeals process.
In the case, PHH was seeking to overturn an administrative law judge’s 2014 decision, which found the company had engaged in a mortgage insurance kickback scheme under the Real Estate Settlement Procedures Act (RESPA). Cordray agreed with the underlying decision, but found that the administrative law judge incorrectly applied the law’s provisions when assessing the penalty PHH should face. When applying those provisions in a way that Cordray found to be correct, PHH’s penalty soared from around $6.4 million to $109 million, according to the ruling.
“While Cordray’s decision appears measured in terms of the remedy granted, an order of a $109 million disgorgement remedy where the CFPB apparently acted as prosecutor, judge, jury and executioner is bound to add steam to congressional efforts to rein in the large degree of the CFPB’s extraordinary independence,” Alan said.