The Department of Justice (“DOJ”) can now join Ocwen in its fight against the constitutionality of the structure of the Consumer Financial Protection Bureau (“CPFB”). Ocwen is one of the country’s largest non-bank mortgage loan servicers, specializing in servicing subprime or delinquent loans. It handles customer service, collections, loan modifications, and foreclosures. It is headquartered in West Palm Beach, Florida, but services loans in all fifty states. In April 2017, the CPFB sued Ocwen Financial Corporation, alleging Ocwen sent inaccurate statements and mishandled payments, taxes, and insurance.
“Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes,” said CFPB Director Richard Cordray. “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”
The CFPB filed the suit in the United States District Court for the Southern District of Florida, seeking a ruling that would require Ocwen to follow the mortgage servicing laws, provide relief to consumers, and pay penalties. In response, Ocwen raised the issue that the CFPB is unconstitutionally structured because the director has too much power and the CFPB operates without supervision or oversight, and requested that the judge toss out the lawsuit.
Earlier this year, PHH Corporation, another mortgage servicer in a battle against the CFPB, also argued the CFPB’s structure is a violation of the separation of powers of the Constitution and should be ruled unconstitutional accordingly. The DOJ elected to join that case and argue on behalf of the U.S. Government. Ocwen has now requested the same assistance from the DOJ, inviting the U.S. Attorney General (“AG”) to participate in the briefing on the motion to dismiss.
In its motion, Ocwen pointed to the amicus brief filed by the AG in the D.C. Circuit’s rehearing of the PHH case in which the AG agreed with PHH’s position that the CFPB’s structure is unconstitutional. Ocwen asserted that because the AG’s views on the CFPB’s constitutionality conflict with those of the CFPB, the court should hear “both sides from the government entities.”
In June 2017, the judge ruled in Ocwen’s favor to invite the AG to participate. In a written statement, the court said that “[i]n light of [Ocwen’s] constitutional concerns, the Court finds it appropriate and prudent to ask the Attorney General of the United States to share with the Court its views on the issues raised…” The DOJ has not commented on whether it will join the case, but according to Ocwen spokesperson, John Lovallo, the company “looks forward to the Attorney General’s views on the constitutional issues raised in our motion to dismiss.”