CFPB Director Cordray Issues Decision in PHH Administrative Enforcement Action

WASHINGTON, D.C. — Today Consumer Financial Protection Bureau (CFPB) Director Richard Cordray issued a decision in the first appeal of a Bureau administrative enforcement proceeding. The Director’s decision concludes that PHH Corp., a mortgage lender, illegally referred consumers to mortgage insurers in exchange for kickbacks. He also issued a final order that prohibits PHH from violating the law and requires it to pay $109 million to the Bureau.

Director Richard Cordray issued a decision upholding in part, and reversing in part, Administrative Law Judge Cameron Elliot’s November 2014 Recommended Decision, which held that PHH violated the Real Estate Settlement Procedures Act (RESPA) when it accepted kickbacks for loans that closed on or after July 21, 2008. Those kickbacks took the form of mortgage reinsurance premiums that the mortgage insurers paid to a subsidiary of PHH.

Director Cordray’s decision held that PHH violated RESPA every time it accepted a kickback payment on or after July 21, 2008 – going beyond Judge Elliot’s ruling, which had limited PHH’s violations to kickbacks that were connected with loans that closed on or after July 21, 2008.

Director Cordray issued a final order that requires PHH to disgorge $109 million – all the reinsurance premiums it received on or after July 21, 2008. The order also bars PHH from violating the provision of RESPA that forbids kickbacks. In addition, it prohibits PHH from referring any consumer to a provider of a real estate settlement service if that provider has agreed to purchase any service from, or make any payment to, PHH, and if that purchase or payment is triggered by the referral.

In issuing his decision and final order, Director Cordray denied the appeal filed by respondents PHH Corp., PHH Mortgage Corp., PHH Home Loans LLC, Atrium Insurance Corp., and Atrium Reinsurance Corp. He also granted in part, and denied in part, an appeal filed by the Bureau’s enforcement counsel.

Any of the respondents may file a petition for review of the Director’s final order in a United States Court of Appeals within 30 days of the service of the final order.

The initial announcement of CFPB’s administrative proceeding against PHH is available here:

https://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-phh-corporation-for-mortgage-insurance-kickbacks/

A copy of today’s decision is available here: https://files.consumerfinance.gov/f/201506_cfpb_decision-by-director-cordray-redacted-226.pdf

A copy of the final order is available here: https://files.consumerfinance.gov/f/201506_cfpb_final_order_227.pdf