Case Summary
**Case Summary: PHH Corporation v. CFPB (Docket No. 6065540)**
**Court:** United States Court of Appeals for the District of Columbia Circuit
**Date:** The case was decided on January 31, 2018.
**Background:**
PHH Corporation, a mortgage lender, challenged the constitutionality of the Consumer Financial Protection Bureau (CFPB) and its interpretation of the Real Estate Settlement Procedures Act (RESPA). The CFPB had imposed a $109 million penalty on PHH for alleged violations of RESPA, primarily for its practices concerning referral fees in the mortgage industry.
**Legal Issues:**
1. **Authority of the CFPB:**
PHH questioned whether the CFPB had the authority to impose penalties based on its interpretation of RESPA, claiming that the existing precedent and rules were not clear and consistent.
2. **Constitutionality of the CFPB Structure:**
PHH argued that the CFPB's single-director structure, which insulated the director from presidential control, violated the separation of powers principle and constituted an unconstitutional delegation of legislative authority.
3. **Statutory Interpretation:**
The case revolved around the interpretation of RESPA regarding the legality of certain mortgage lender referral arrangements. PHH contended that its practices were permissible under established interpretations, while the CFPB argued otherwise.
**Ruling:**
The D.C. Circuit Court ruled in favor of PHH in part and provided a significant critique of the CFPB's authority and structure:
- The court held that the CFPB had misinterpreted the law, specifically regarding the legality of certain referral payments.
- The court found the CFPB's single-director structure unconstitutional, arguing that it violated the President's authority to supervise and remove executive branch officials.
**Outcome:**
The appellate court vacated the CFPB's order against PHH, effectively nullifying the penalty imposed by the agency. This ruling raised significant questions about the future of the CFPB and its regulatory authority, leading to discussions about potential reforms to the agency's structure and operational framework.
**Significance:**
The case is notable for its implications on the regulatory powers of the CFPB and has been cited in discussions about the oversight of federal agencies. It also highlighted the ongoing debate about the constitutionality of independent regulatory agencies and the balance of power within the federal government.