The scope of the power of the Consumer Finanical Protection Bureau is under challenge by a New Jersey lender, which is arguing the CFPB Director Richard Cordary illegally imposed a $109 million penalty against it, The Wall Street Journal's Yuka Hayashi reports.
An in-house CFPB judge originally ruled that PHH Corp. took "kickbacks" from mortgage insurers and increased costs for mortgage borrowers. The CFPB says PHH referred borrowers to mortgage-insurance companies and would collect up to 40 percent of the premiums. On appeal, Cordray imposed a penalty that was 18 times more than the in-house judge had sought. Cordray concluded that PHH had violated the law each time it received a monthly payment.
The case is now pending before the U.S. Court of Appeals for the D.C. Circuit and "revolves around the CFPB’s new hard-line interpretation of the four-decade-old Real Estate Settlement Procedure Act, designed to keep lenders and realtors from inflating home-sale transaction costs."
Lawyer and Legal Journalist
