## Facts

- The Consumer Financial Protection Bureau (CFPB) brought an administrative enforcement action alleging PHH Corporation and affiliates violated RESPA § 8(a) by using a mortgage insurance referral arrangement tied to “captive reinsurance” purchased from a PHH affiliate.
- An administrative law judge found RESPA violations and recommended approximately $6.4 million in disgorgement.
- On intra-agency appeal, the CFPB Director affirmed liability, adopted a broader interpretation of RESPA, treated each premium payment as a separate violation, rejected application of RESPA’s three-year limitations period to CFPB administrative enforcement, and increased disgorgement to about $109 million.
- PHH petitioned for review in the D.C. Circuit, challenging both the CFPB’s statutory interpretations and the constitutionality of the CFPB’s single-director, for-cause removal structure.
- A D.C. Circuit panel vacated the disgorgement order and remanded; the D.C. Circuit later reheard the case en banc, vacating the panel’s constitutional holding while leaving the panel’s RESPA/limitations holdings in effect.

## Issues

1. Whether the CFPB’s structure—an independent agency led by a single Director removable by the President only for cause—violates Article II and separation-of-powers principles.
2. Whether RESPA § 8 permits captive reinsurance arrangements when payments reflect reasonable market value under RESPA § 8(c)’s bona fide compensation provision.
3. Whether due process bars the CFPB from retroactively applying a new RESPA interpretation in an enforcement action.
4. Whether RESPA’s three-year statute of limitations applies to CFPB enforcement, including administrative proceedings.

## Decision

- The en banc D.C. Circuit upheld the CFPB’s single-director, for-cause removal structure as consistent with Article II and reversed the panel’s contrary constitutional ruling.
- The court remanded for further proceedings consistent with the panel holdings that remained operative on statutory and remedial questions.
- The panel holdings left in place required: (i) a market-value approach under RESPA § 8(c) for captive reinsurance, (ii) rejection of retroactive application of a novel interpretation as a due process violation, and (iii) application of RESPA’s three-year limitations period to CFPB enforcement.
- The CFPB’s $109 million disgorgement order was vacated and the matter was remanded to the agency for recalculation and further proceedings under the governing interpretations.

## Legal Principles

- Congress may create an independent agency headed by a single Director who is removable by the President only for cause; a multi-member commission is not constitutionally required.
- Under RESPA, captive reinsurance arrangements are not per se unlawful when payments reflect the reasonable market value of reinsurance services within § 8(c)’s bona fide compensation allowance.
- Due process limits agencies from imposing liability by retroactively applying a materially new statutory interpretation developed in an enforcement proceeding to past conduct undertaken under a settled understanding.
- RESPA’s three-year statute of limitations constrains CFPB enforcement of RESPA, including administrative enforcement, absent a clear statutory basis for a different limitations rule.

## Conclusion

The en banc D.C. Circuit sustained the CFPB’s single-director independence against an Article II challenge, while the operative statutory rulings restricted CFPB RESPA enforcement by requiring a market-value analysis under § 8(c), barring retroactive shifts in interpretation that violate due process, and applying RESPA’s three-year limitations period to administrative actions.


PHH Corp. v. Consumer Fin. Prot. Bureau, 881 F.3d 75 (D.C. Cir. 2018) (en banc)