Home / Compliance / Servicer Asks Judge to Reconsider MTD in CFPB Case Now That Agency Admits Leadership Structure is Unconstitutional

Servicer Asks Judge to Reconsider MTD in CFPB Case Now That Agency Admits Leadership Structure is Unconstitutional

A mortgage servicer being sued by the Consumer Financial Protection Bureau for allegedly “failing borrowers at every stage of the mortgage servicing process,” has asked a federal judge to reconsider its motion to dismiss after the CFPB has conceded the point that its leadership structure is not constitutional.

A copy of the motion for reconsideration in the case of CFPB v. Ocwen Financial Corp., can be accessed by clicking here.

The CFPB last month submitted a brief to the Supreme Court admitting that its leadership structure is unconstitutional and should be changed to a structure similar to the Federal Communications Commission or the Federal Trade Commission.

Now, Ocwen is using that declaration as the basis to ask a judge to reconsider its motion to dismiss, which argued the very point the CFPB has now admitted.

Based on the Bureau’s Notice, as well as the Government’s position stated to the Supreme Court, there can no longer be any dispute regarding the constitutionality of the CFPB Director’s for-cause removal provision. The Bureau has officially abandoned the contrary position on which this Court rested its denial of Ocwen’s arguments concerning the agency’s unconstitutional structure. Thus, for the now undisputed reasons Ocwen previously argued, and as further set forth below, this case should be dismissed because the Bureau “lacks authority to bring this enforcement action.”

The judge had originally denied Ocwen’s motion to dismiss, but relied on other court decisions in ruling that the leadership structure of the CFPB was constitutional. Ocwen is now asking the judge to reconsider the motion to dismiss

It will be interesting to see if other organizations involved in legal actions with the CFPB use the CFPB’s admission as a means of dismissing or setting aside their cases.

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