MBA, NAHB Ask Court to Consider Impact of CFPB Constitutional Ruling

A federation of housing industry associations, including Mortgage Bankers Association (MBA), National Association of Home Builders (NAHB) and National Real Estate Agents Association (NAR) has filed a joint brief. Supreme Court of the United Statesasked to understand the full implications of the forthcoming decision on constitutionality. Consumer Financial Protection Bureau (CFPB).

The Joint Preparatory Document shall: Association of American Regional Financial Services v. Consumer Financial Protection Bureau, the case will be heard by the court during its next term, which begins in October. The lawsuit could have adverse consequences for the CFPB if the court finds it unconstitutional.

In their statements of interest in the brief, the groups noted that the brief was submitted because of their “strong interest in maintaining stability in the mortgage and real estate markets.”

If the Supreme Court decides that the Payday Lending Rule needs to be repealed, it will need to be very careful in how it decides on the CFPB’s operational and regulatory enforcement powers, the groups said.

“[The Court] While receiving funding, care must be taken to make limited rulings that do not call into question other important regulations the CFPB has issued in the past few years. [under the current mechanism]’” is written in part in the briefing document. “of Seila Law LLC v. CFPBThe court found that the full reversal of the CFPB’s actions would “cause significant regulatory disruption” and “substantially harm Congressional activity in the consumer finance sector,” the brief said. It is

That warning remains true in this case, the brief argues, because the decision could have far-reaching implications for the industry in which the organization operates.

“[The organizations wish] “This is to highlight the potentially devastating consequences that any decision to question these rules could have on the mortgage and real estate markets,” the brief said. “The Court should therefore be careful not to question existing CFPB regulations, including those governing the real estate finance industry, which could lead to immediate and severe disruption to the housing market, can damage both.”

While these organizations take no position on the constitutionality of the CFPB itself, much of the rulemaking since the CFPB’s founding (often in conjunction with dialogue with industry players) could have serious consequences, the brief argues. .

“If a court ruled over payday lending rules and held that these mortgage-related rules were potentially invalid because they were promulgated in the following manner: [Treasury appropriations]which could create a series of difficulties that could disrupt the housing market and disadvantage all mortgage borrowers,” the memorandum said.

The outcome of such a ruling will face “substantial uncertainty” for lenders, servicers and consumers who have operated under the CFPB’s regulatory framework for over a decade. This leaves the industry speculating about how mortgage transactions are conducted under federal law.

The lawsuit, which was at the center of this impending decision, was filed by Payday as a challenge to the 2017 microfinance rules, which prohibit lenders from attempting to withdraw funds from a borrower’s bank account after up to two failed attempts. – Created by an industry group in the loan industry. Withdraw funds that have been paid for loan payments.

of Association of American Regional Financial Services and Texas Consumer Service Alliance The original lawsuit argued that the CFPB’s salary rules were arbitrary, capricious, and beyond statutory authority. Industry groups also challenged the structure of the CFPB, the powers granted by Congress, and the protection of the secretary from removal, arguing that all were unconstitutional.

The Supreme Court agreed to hear the case in February, but a final ruling is not expected until early 2024 at the earliest. The Biden administration tried to expedite the decision on appeals, but the Supreme Court refused to change the date.

Recently, the CFPB submitted a brief to the Supreme Court claiming constitutionality.

Other briefs defending the CFPB have recently been filed with the Supreme Court, including by a coalition of 140 current and former Democratic lawmakers and a coalition of consumer advocacy groups such as: be consumer report, National Consumer Law Center and citizen.

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