CFPB Gets a Win in Ocwen Case

For going on two months, Ocwen Financial Corporation, the country’s largest nonbank mortgage loan servicer, and the Consumer Financial Protection Bureau (CFPB) have been at odds. Beginning in late April, the CFPB sued Ocwen and its subsidiaries claiming that they have been “failing borrowers at every stage of the mortgage servicing process.” Days later, Ocwen responded by filing three motions with the court in hopes of expediting the ruling on the constitutionality of the CFPB and its leadership structure, one of which invited the Department of Justice to participate in the case. Now, a federal judge has slowed down Ocwen's bid to test the constitutionality of the CFPB.

In October 2016, in the case of PHH Corp. v CFPB, a three-judge panel from the D.C. Circuit Court of Appeals judged the CFPB’s structure unconstitutional. They vacated a $100 million fine against PHH and gave the president power to fire CFPB Director Richard Cordray at will, however the case was set to be reheard May 24, 2017, by the entire D.C. Circuit Court of Appeals allowing the CFPB to defend itself.

In response to the allegations, Ocwen called the Bureau “an unaccountable agency” and asked that the constitutionality ruling be expedited. The agency citied a number of errors in the CFPB’s filing, including the bringing up of issues that had already been resolved, however, the CFPB told a Florida federal court in early May that the mortgage servicer should not be allowed special treatment in the case, being that they provided no legal authority or any other compelling reason why.

Judge Kenneth Marra of the U.S. District Court for the Southern District of Florida decided recently that Ocwen will be delayed in testing the constitutionality of the CFPB.

Ocwen’s request to seek U.S. Attorney General Jeff Sessions’ views on the CFPB’s constitutionality was declined by Marra. In a separate June 2 order, Marra said it was “premature” to invite the Attorney General’s views, but he can weigh the request again in the context of an Ocwen motion to dismiss.

“Until a motion is filed setting forth the exact basis for the challenge, the Attorney General will not have sufficient information to determine whether he should intervene,” Marra said.

“We have reviewed the order, which addresses how the Court would like to have the constitutional attack presented to it,” Ocwen representative John Lovallo said in an email to Bloomberg BNA. “We look forward to including that argument with all of the other reasons CFPB’s suit is unjustified and should be dismissed.”

The U.S. Court of Appeals for the District of Columbia Circuit is currently processing the constitutional status of the CFPB in PHH Corp. v CFPB, but according to Bloomberg BNA, many believe the court will rule for the CFPB, setting up the case for consideration by the U.S. Supreme Court.

“Ocwen’s motion to dismiss is currently due June 19, and constitutionality will be one of many arguments," Lovallo said.