On Oct. 11, 2016, in PHH Corp. v. Consumer Financial Protection Bureau,1 the U.S. Court of Appeals for the District of Columbia Circuit issued a sweeping ruling against the Consumer Financial Protection Bureau (CFPB), holding that the independent single-director model was constitutionally impermissible. In addition, the circuit court flatly rejected the bureau’s regulatory interpretation deeming “captive reinsurance” arrangements illegal under the Real Estate Settlement Procedures Act (RESPA);2 held that even if that interpretation were reasonable, the CFPB could not apply it retroactively and without notice, especially after previous regulators had allowed the practice; and concluded—contrary to the CFPB’s argument that such actions were not subject to any statute of limitation—that the bureau’s administrative actions under RESPA were subject to the three-year statute of limitations set forth in that statute.

The circuit court’s constitutional holding was certainly noteworthy—the CFPB director will now serve at the direction of the president, and the next president will be able to immediately choose the next bureau director rather than wait until the current term expires in 2018. But, the agency was not abolished, and the director was not replaced by a multiple-member commission or board. As detailed below, the court’s separation of powers ruling may not have a far-reaching impact on bureau proceedings in the short term. In fact, the court’s other substantive rulings may more dramatically shape future and pending CFPB enforcement actions.

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