Mortgage firm drops major challenge to consumer bureau structure

A New Jersey-based mortgage company declined this week to appeal a federal ruling in its watershed suit against the Consumer Financial Protection Bureau (CFPB).

A spokesman for PHH Corp. on Thursday told The Hill that the mortgage firm did not appeal a January ruling in its suit against the CFPB to the Supreme Court by the May deadline to do so.

PHH had sued the CFPB over a $103 million fine issued by the bureau in 2015 over alleged violations of lending laws. The company disputed the CFPB’s defense for the fine and claimed the bureau had no authority to issue it because its structure was unconstitutional.

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The U.S Court of Appeals for the District of Columbia Circuit ruled in January that the CFPB’s structure was constitutional, but reimbursed PHH for what it considered an inappropriate fine.

Judge Nina Pillard, who wrote the court’s opinion, cited the precedent set by Humphrey’s Executor v. the United States, a 1935 case reaffirming the legality of the Federal Trade Commission’s independent, sole-director structure.

“The Court approved the very means of independence Congress used here: protection of agency leadership from at-will removal by the President. The Court has since reaffirmed and built on that precedent, and Congress has embraced and relied on it in designing independent agencies,” Pillard wrote.

That decision overturned a 2016 ruling from a panel of the court’s judges, which ruled that the CFPB director must be fireable at will by the president.

PHH’s decision not to appeal the January ruling resolves one of several legal threats to the CFPB’s structure. The Fifth Circuit Court of Appeals will also hear a challenge to the CFPB’s constitutionality, and a ruling against the bureau could prompt the Supreme Court to resolve the issue itself.

Mick Mulvaney, the CFPB’s acting director, has said for years he believes the agency’s power and independence are unconstitutional and has asked lawmakers to restrain the bureau in appearances before Congress.