PHH Corp., the company made famous recently for its alleged mortgage insurance kickback scheme, is taking on the Behemoth Bureau with an attempt to overturn its $109 million penalty. The theory? That the Bureau's ruling was an abuse of discretion.
Last Friday, PHH petitioned the appeals court to review the CFPB's order because it is "arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act" and, if that is not enough, it is a violation of federal law, including the Real Estate Settlement Procedures Act and the Consumer Financial Protection Act of 2010.
In early June, Director Cordray supported the findings of the Administrative Law Judge Cameron Elliot on the point of its correctness; however, Mr. Cordray said that Judge Elliot incorrectly applied the law's provisions when assessing PHH's penalty.
Let's dig a little deeper. What Mr. Cordray was maintaining was the view that the penalty for RESPA kickbacks for mortgages that closed on or after July 21, 2008 - which, by the way, is exactly three years before the date when the Bureau assumed RESPA enforcement authority from HUD - should be penalized for each payment PHH received after that date. ...