The long-running legal confrontation between PHH Corp. and the CFPB took another turn right before the holidays, with the nation’s eighth largest lender telling the District of Columbia Circuit Court of Appeals that its three-judge panel got it right in October when it ruled the CFPB’s leadership structure is unconstitutional. “The panel grounded its decision in existing Supreme Court precedent and other settled authority,” the company said. “It remedied a violation of the separation of powers by allowing the agency to continue to operate subject to basic constitutional constraints, without addressing the decision’s effect on past actions.” Further, “the panel interpreted the Real Estate Settlement Procedures Act according to its plain language and consistently with every other circuit to consider ...

The important constitutional issue of separation of powers, and the perhaps somewhat unorthodox manner in which the three-judge panel of the District of Columbia Circuit Court of Appeals concluded that the CFPB’s leadership structure is unconstitutional, justify the court granting the bureau’s request for a rehearing en banc in its dispute with PHH Corp., the U.S. Justice Department told the court. “The conferral of broad policymaking and enforcement authority on a single person below the president, whom the president may not remove except for cause ... raises a significant constitutional question that the Supreme Court has not yet squarely confronted,” the DOJ said. To date, the nation’s highest court has sanctioned a limitation on the power to remove principal officers ...

Numerous experts, commenters and observers are under the assumption that President-elect Trump will have to let the courts reach a definitive legal decision on the PHH Corp. v. CFPB litigation before deciding whether to remove CFPB Director Richard Cordray without cause. However, that’s not the case, according to Aditya Bamzai, associate professor of law at the University of Virginia School of Law. In a recent online blog post, Bamzai said the (sometimes unstated) premise in various articles and reports is that the CFPB’s pending challenge to the panel decision somehow prevents any attempt to oust Cordray. “Such a premise appears to rest on two mistaken assumptions: that the president cannot exercise his removal authority absent an Article III judgment authorizing ...

As 2016 drew to a close, various industry officials were busy making the case for legislation that would alter the structure of the CFPB and clip its wings as part of a strategy to scale back the Dodd-Frank Act and provide lenders with significant regulatory relief. Industry officials are confident they will encounter a more sympathetic White House with Donald Trump as the occupant. Analysts with Compass Point Research & Trading believe a number of important issues will be addressed as part of the final legislative regulatory relief package, including governance changes shifting the CFPB, as well as the Federal Housing Finance Agency and the Office of the Comptroller of the Currency, into commission structures. They also expect to see ...

Mortgage-related issues will be a big component of the CFPB’s fair lending priorities for 2017, the bureau indicated in an online blog post late last year. Among the issues for the mortgage industry are redlining and servicing. “While the bureau has taken important strides in our efforts to protect consumers from credit discrimination and broaden access to credit, we continue to identify new and emerging fair lending risks and we will monitor institutions for compliance,” said Patrice Ficklin, associate director of the CFPB’s Office of Fair Lending. Going forward, then, the bureau is increasing its focus in three key areas, the first of which is redlining. “We will continue to evaluate whether lenders have intentionally avoided lending in minority neighborhoods,” ...

CFPB Again Moves Against Finance Company. Late last month, the CFPB took its second legal action against Military Credit Services, LLC, a Norfolk, VA-based finance company, accusing the company of making loans with improper disclosures.... TransUnion Agrees to $19.4 Million Settlement. TransUnion, one of the largest credit reporting agencies in the U.S., has agreed to settle a dispute with the CFPB over the company’s practices related to the advertising, marketing and sale of consumer reports, credit scores or credit marketing products to consumers, the firm said in a recent Form 8-K filing with the Securities and Exchange Commission....

The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits. But the CBO admits those changes would result in raising the cost to borrowers and could potentially restrain the housing market. Under CBO scorekeeping, MBS guarantees provided by the two government-sponsored enterprises from 2017 to 2026 will cost the government $12 billion. Reducing subsidies also would help renew private sector participation in the secondary market, the CBO said. It proposes...

In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...

Fitch Ratings edged out Standard & Poor’s as the most active rating services in the non-mortgage ABS market during the first nine months of 2016, a new Inside MBS & ABS analysis and ranking reveals. Fitch also was the top rating service in the more subdued non-agency MBS market. The company rated some $10.80 billion of non-agency MBS, or 64.8 percent of the total market, which includes a substantial volume of unrated private deals. DBRS (37.2 percent market share) and Moody’s Investors Service (34.5 percent) were...[Includes two data tables]

Real estate investment trusts that invest in agency MBS could be in for some turbulence on their book values in the coming quarters if rates continue to rise – as they have since the November election. As Inside MBS & ABS went to press, most analysts had come to the same conclusion: that publicly traded mortgage REITs have underperformed most financial stocks, including nonbank lender-servicers such as Ocwen Financial, PHH Corp. and Walter Investment Management Corp. Then again, investing in so-called mREITs has never been...