PHH Mortgage Corporation and the Anti-Consumer Agency CFPB’s Relationship is Undoubtedly Incestuous

Ocwen Beats CFPB Lawsuit … Again (2023)

MAY 3, 2023 | REPUBLISHED BY LIT: SEP 23, 2023

For the second time, a federal judge rules CFPB complaint was precluded by a 2017 settlement.

For the second time, Ocwen Financial Corp. has beaten a mortgage servicing misconduct lawsuit brought by the Consumer Financial Protection Bureau (CFPB).

Judge Kenneth Marra of the U.S. District Court for the Southern District of Florida, on Tuesday granted summary judgment for Ocwen in the case, which was originally filed by the CFPB in April 2017.

In that complaint, the CFPB accused Ocwen, based in West Palm Beach, of mortgage servicing misconduct from 2014 through 2017. The lawsuit claimed the company’s servicing database contained inaccuracies and incomplete information, causing wrongful foreclosure proceedings against approximately 1,000 families.

Ocwen initially defeated the case in 2021, when Marra ruled that the CFPB’s lawsuit was precluded by a $2.1 billion settlement Ocwen had reached in 2014 with federal and state government officials. In that settlement, the company agreed to provide $125 million in refunds to consumers who lost their homes to foreclosure while being serviced by Ocwen or its subsidiaries between 2009 and 2012.

Ocwen also agreed to work with mortgage holders to ensure that, over a three-year period, homeowners would receive $2 billion in principal reductions. Under the agreement, if that $2 billion goal was not reached, the difference between the relief achieved and $2 billion would be assessed against Ocwen as a penalty that would be divided among the CFPB and state attorneys general.

Marra’s initial ruling in favor of Ocwen was appealed to the U.S. Court of Appeals for the Eleventh Circuit, which remanded the case back to Marra and ordered a “claim-by-claim” assessment.

Marra’s decision issued Tuesday, however, once again ruled in favor of Ocwen, writing in his order that the terms of the company’s settlement “bar the bureau’s current claims in toto.”

“The Court’s claim-by-claim analysis leads it to the conclusion” that the settlement precludes “all of the claims asserted” in the CFPB complaint, he wrote.

Ocwen issued a statement praising the decision.

“We are pleased that the district court has ruled in our favor, acknowledging that the CFPB cannot unilaterally ignore the provisions of a prior settlement agreement,” the company said. “Throughout this litigation we have remained steadfast in our belief that the CFPB’s claims regarding Ocwen’s past servicing practices were without merit. Should the CFPB decide to file an appeal, Ocwen will continue to vigorously defend itself, as we have done throughout the course of this litigation.”

The CFPB has not commented on the decision.

Ocwen Financial Corp. is one of the leading nonbank mortgage servicing companies in the U.S., servicing over 1.3 million customers through its primary brands PHH Mortgage and Liberty Reverse Mortgage.

It’s over: CFPB abandons PHH case (2018)
Ends three-year battle

JUN 7, 2018 | REPUBLISHED BY LIT: SEP 23, 2023

The Consumer Financial Protection Bureau moved Thursday to dismiss its case against PHH, a remarkable turnaround that crystallizes the differences between former CFPB Director Richard Cordray and current Acting Director Mick Mulvaney.

The case all started back in 2015 when Cordray tacked a $103 million increase onto a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks.

PHH fought the fine, arguing that Cordray did not have the authority to increase the fine. The case eventually made its way to the federal Court of Appeals, which ruled in 2016 that the CFPB’s leadership structure was unconstitutional and vacated the additional $103 million fine.

The CFPB, under Cordray, fought the ruling and asked the court to rehear the case en banc, meaning that it wanted the entire court to hear the case, which the court agreed to do back in February 2017.

But Cordray left the bureau before the case could be heard by the full Court of Appeals, leaving the post to Mulvaney, who brought a significantly different tact to the position than his predecessor.

Last year, the government began to indicate that it might be switching sides in the battle between the CFPB and PHH, signaling that the Trump administration had a different view of the CFPB than the Obama administration had.

And indeed that’s what happened, as the Department of Justice filed an amicus brief in March 2017, asking the court to rule the CFPB’s leadership structure unconstitutional and grant President Donald Trump the authority to fire the CFPB director at will.

Earlier this year, the full Court of Appeals handed down its ruling, declaring the CFPB to be constitutionally structured and that the director is removable only for cause.

But, PHH won a significant portion of the case, with the Court of Appeals also vacating the $100+ million fine against it for the supposed violations of the Real Estate Settlement Procedures Act.

At the time, the Court of Appeals remanded the case back to the CFPB to determine the next steps, and it appears that the CFPB has chosen to dismiss the case.

In a statement released Thursday afternoon, PHH said that Mulvaney issued an order to dismiss the bureau’s administrative proceedings against the company.

“We are extremely gratified to have this matter fully resolved as a result of Acting Director Mulvaney’s decision to dismiss this case,” PHH said in a statement. “Today’s Order is consistent with our long-held view that we complied with RESPA and other laws applicable to our former mortgage reinsurance activities in all respects.”

One of the bureau’s most frequent bashers, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, also released a statement welcoming Mulvaney’s move.

“Once again, Acting Director Mulvaney is doing what is needed to continue the agency’s transformation into one that follows the law as written,” Hensarling said in a statement.

“In the PHH case the facts show that former Director Cordray unilaterally reversed accepted law with regards to Section 8(c) of RESPA, and did so not with formal rulemaking, but with an ad hoc enforcement action instead,” Hensarling added.

“Then, to make matters worse, former Director Cordray attempted to apply this new, rogue standard retroactively,” Hensarling concluded. “The D.C. Circuit Court rightfully ruled against him in both instances. This dismissal is the final nail in the coffin of what was a sad chapter in the Bureau’s short history.”

Earlier this year, PHH chose not to elevate its challenge to the CFPB’s structure to the Supreme Court, and with Mulvaney’s dismissal, the entire RESPA affair is now over.

The CFPB claimed the dismissal was simply a matter of housekeeping.

“This wasn’t so much a dismissal as a matter of housekeeping,” said John Czwartack, CFPB communications officer and spokesman in a statement to HousingWire. “Earlier this year the DC circuit court largely dismissed the legal arguments the bureau had been making in this case.”

“The court left open some issues that the bureau determined to resolve through dismissal rather than continued litigation,” Czwartacki said. “This dismissal just ends this embarrassing chapter that was premised on then-Director Cordray’s questionable legal theories, which never should have been pursued, and that the DC Circuit rightly rejected in January.”

RIP Residential Homeownership in America https://t.co/N52UdzOWO2 pic.twitter.com/cxrfw6utqA

— lawsinusa (@lawsinusa) August 18, 2023

Mt. Laurel firm (PHH Mortgage Corporation) in $109-million fight (2015)

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AUG 4, 2015 | REPUBLISHED BY LIT: SEP 23, 2023

MOUNT LAUREL – A South Jersey mortgage firm has won a reprieve in its fight with a federal regulator seeking a $109 million fine.

A U.S. appeals court ruled Monday PHH Corp. of Mount Laurel won’t have to pay while it challenges the demand by the Consumer Financial Protection Bureau.

The CFPB levied the penalty on June 4, saying PHH and four subsidiaries “illegally referred consumers to mortgage insurers in exchange for kickbacks.”

The CFPB said kickbacks “took the form of mortgage reinsurance premiums that the mortgage insurers paid to a subsidiary of PHH.” That scheme started as early as 1995 and netted PHH “hundreds of millions of dollars,” according to the CFPB.

An administrative law judge initially recommended a $6.4 million civil fine in November 2014, but CFPB Director Richard Cordray increased the penalty after an appeal by PHH.

Cordray’s order also barred PHH from referring customers to a real estate settlement firms “if that provider has agreed to purchase any service from, or make any payment to, PHH, and if that purchase or payment is triggered by the referral.”

PHH, which denies any wrongdoing, is challenging Cordray’s decision in the U.S. Court of Appeals in the District of Columbia.

In a statement, the firm said Tuesday it was gratified the appellate court “found that PHH satisfied the stringent requirements for a stay pending appeal — requirements that include a likelihood of success on the merits.”

Among other points in its challenge, PHH contends regulators at the 4-year-old bureau retroactively interpreted real estate law to prohibit actions that were, “at the time of the conduct, expressly permitted.”

A court filing for PHH also asks “whether the unprecedented structural features of the CFPB, which combine legislative, executive and judicial power in the hands of a single individual, violate the separation of powers.”

PHH is represented by high-power Washington, D.C., attorney Theodore Olson, a former solicitor general for President George W. Bush.

A website for Olson’s law firm notes his role in cases that resolved the 2000 presidential election and eased restrictions on corporate campaign contributions.

Just to make sure this isn’t deleted as well Katie, “I have been to the movie and see how it ends and the joke is on them”. Stop your fraud on the constituents you claim to represent. Resign, today. https://t.co/5jgNagSigX @ap @abc @BBCPolitics @WSJ @propublica @NBCNews @CBSNews pic.twitter.com/ffeitFDoxB

— lawsinusa (@lawsinusa) September 25, 2023