Acting Consumer Financial Protection Bureau Director Mick Mulvaney on Thursday dismissed the bureau’s case against PHH Corp., ending a contentious legal battle that resulted in no fines against the company and no change to the independent agency’s structure.
Mulvaney wrote in a two-paragraph legal filing that the Mount Laurel, N.J., company did not violate the Real Estate Settlement Procedures Act, which bans kickbacks in exchange for referrals.
“PHH did not violate RESPA if it charged no more than the reasonable market value for the reinsurance it required the mortgage insurers to purchase, even if the reinsurance was a quid pro quo for referrals,” Mulvaney wrote.
Lawyers had expected Mulvaney would dismiss the case after Kristen Donoghue, the CFPB’s director of enforcement, filed a joint statement with PHH’s lawyers on Tuesday recommending that Mulvaney drop the case outright.
The PHH case was initially decided in 2014 when an administrative law judge who worked for the Securities and Exchange Commission ordered the company to pay $6 million for allegations that it took illegal kickbacks from mortgage reinsurers.
In 2015, then-CFPB Director Richard Cordray overruled that decision and ordered PHH to pay a $109 million fine, prompting the company to sue. PHH claimed, among other things, that the CFPB’s single-director structure was unconstitutional.
In January, an en banc panel of the U.S. Court of Appeals for the D.C. Circuit ruled that the CFPB’s structure was constitutional, but that the agency’s novel interpretation of RESPA was not.
The court said Cordray had violated PHH’s due process rights in redefining RESPA without giving the company notice.