Ocwen had told the Court that it “believes that the CFPB is unconstitutionally structured because it vests unfettered power in the hands of the CFPB’s Director and the Bureau itself, without any meaningful oversight by the President or Congress.”
Ocwen’s concerns mirror that of some Republicans who claim that the single-director structure of the CFPB provides unchecked powers that should be overseen by Congress. In it’s brief to the Court, Ocwen indicated that it’s chief issue is with the single-director structure, which it claims violates the Constitution’s separation of powers clause.
The CFPB filed s suit against Ocwen in April, accusing the mortgage servicer of initiating wrongful foreclosure proceedings against thousands of homeowners. The company has come under fire lately, facing over 20 challenges from states opposed to it acquiring further servicing contracts. Florida filed a wrongful foreclosure suit against the company on the same day as the CFPB filed their complaint.
In its response to the CFPB’s complaint, Ocwen stated that the bureau is “an unaccountable agency” and offered erroneous information provided by the agency as an example of what it considers spurious allegations. Ocwen asserts that many of the claims made against it are outdated, and based on unverified complaints.
“The Complaint is riddled with allegations about conduct that Ocwen already addressed—sometimes years ago—with refunds, credits, or other consumer remedies,” Ocwen stated. “Moreover, the CFPB contends that on ‘numerous’ occasions or ‘at least one thousand’ times Ocwen has wrongfully started or completed foreclosures on consumers who were in the midst of applying for or performing a loan modification. But, so far as Ocwen is aware—and the Complaint does not identify the loans—the CFPB did not actually look at the individual servicing files for these consumers’ loans before making this allegation.”
The CFPB’s complaint stems from Ocwen’s proprietary servicing program, known as “REALServicing.” The Bureau claims that the system generated errors on thousands of files, and indicated that a March 2016 report from Ocwen confirms that 90 percent of the loans it verified contained incorrect data or missing information.
Ocwen struck back against the complaint by challenging the agency’s structure, claiming the lack of congressional oversight provides the federal watchdog group with too much leeway in prosecuting and unilaterally penalizing financial institutions.
The CFPB countered by pointing out that constitutional challenges are historically not ruled on in cases that can be decided based on other grounds. In defending its position, the Bureau said, “Defendants’ request would result in exactly what the rule was intended to prevent: unnecessary delay and piecemeal consideration of the case.”
In October 2016, the D.C. Circuit ruled the single-director structure of the agency unconstitutional, but that ruling was vacated in February pending an en banc appeal.