This past week, the real estate industry was rocked again by the latest development in the epic court battle between PHH Corporation and the Consumer Financial Protection Bureau. Many observers predict that the U.S. Supreme Court will weigh in on the matter. When I consulted my Magic Eight Ball about that, it responded, “Very Doubtful.”
In its sprawling, 250-page ruling on Wednesday, the United States Court of Appeals for the District of Columbia Circuit, sitting en banc, held that the CFPB is constitutionally structured and does not violate the president’s executive authority. The full court also affirmed earlier rulings by a three-judge panel about the application of the Real Estate Settlement Procedures Act (RESPA) to the case.
So is this the last we’ll hear about PHH’s travails? Yes, I say. Why? Because of the dynamics involved and because of the changed interests of the various parties. Take PHH for example. The company got a good result with the RESPA rulings and is probably happy to go back to the lower courts with that. It can try to negotiate a settlement with the new, business-friendly CFPB director, Mick Mulvaney. If PHH appeals to the U.S. Supreme Court, its RESPA victories might go away (or would become uncertain) if the high court finds that the CFPB is unconstitutionally structured.
What about the CFPB, will it appeal? That’s highly unlikely. It won on the constitutional question, so it really can’t appeal that. On the RESPA questions, again, the CFPB is now run by a man who formerly called the bureau a sad, sick joke. That an appellate court reined in the aggressive positions of his predecessor is probably pleasing to Mulvaney.
What about the Trump administration, will it appeal? If Richard Cordray were still the director (and would be for a long time), President Trump would have every reason to want to oust him. But with a business-loving director like Mulvaney in office, Trump has little reason to do that. And all the conservatives who had a hobby of hating on Cordray for his excesses, they would staunchly defend Mulvaney’s independence (or that of someone like him) if a Democratic president tried to remove him.
So it all comes down to timing and interests. Yes, the U.S. Supreme Court will someday address the question of the CFBP’s constitutionality. But it won’t be in the PHH case.