On May 24, 2017, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in the case of PHH Corp. v. CFPB. The court examined whether the Consumer Financial Protection Bureau’s (CFPB) single director structure is unconstitutional and whether the CFPB exceeded their authority when interpreting the Real Estate Settlement Procedures Act (RESPA). The bulk of the oral arguments focused on the constitutionality argument, rather than the RESPA concerns.
Initial reports indicate the court is unlikely to rule the CFPB is unconstitutionally structured (rejecting the previous three-judge panel decision) but will uphold the RESPA interpretation in favor of PHH (and NAR) issued by the three-judge panel in October. Recall, the three-judge panel held that payments for bona fide services provided and made at fair market value do not violate RESPA, reinforcing NAR’s support of marketing service agreements.
The court will likely publish their decision sometime in the fall at the earliest. In the meantime, the CFPB continues to issue enforcement actions on RESPA related concerns, as evidenced by the recent Consent Orders. NAR continues to work with the CFPB on these matters and the impact on the real estate industry.