A legal battle is brewing over the power of the Consumer Financial Protection Bureau (CFPB), which is to be reviewed by the District of Columbia Circuit Court of Appeals on April 12. The CFPB has been considered as America's consumer finance watchdog, making it a huge deal as to what it is facing right now.
The argument originated from CFPB Director Richard Cordray when he decided to uphold the decision of an in-house judge that the PHH Corp. lender has taken illegal 'kickbacks' from mortgage insurers, which led to an increased cost for borrowers, reported The Wall Street Journal. This further resulted to the New Jersey-based lender having a $6 million-worth of fine.
As response, the PHH Corp. has protested over the judge's ruling. But instead of making things better for them, it only got worse as its protest backfired on them. According to PYMNTS, Cordray has apparently demanded the lender to pay $109 million, or 18 times more, for alleged ill-gotten gains as well as for continued violation of law with monthly payments from reinsurance contracts.
PHH Corp. viewed Cordray's decision as an 'overly aggressive interpretation of an old law.' However, for Cordray, he only saw it fit and appropriate to take an even harder stance on the case. Besides, it is the mission of the bureau, by foundation, to approach years of poor consumer protection in a tough way.
The lender, on the other, has consistently denied accusations of taking kickbacks ever since the America's consumer finance watchdog initiated the administrative proceeding in January 2014, Philadelphia Business Journal said. PHH Corp. filed its appeal last September 28, with various business groups also filing briefs to show support of the lender's position in October 2015.
As mentioned, this argument already moved to a federal appeals court. The District of Columbia Circuit Court of Appeals is already scheduled for the hearing of the case on April 12.
