DOJ will be allowed to join Ocwen’s challenge to constitutionality of CFPB

Judge grants Ocwen’s request to have Justice Department weigh in

Ocwen Financial could soon get a big boost in its fight against the Consumer Financial Protection Bureau from a once-unlikely source – the Department of Justice.

In defending itself against the CFPB’s claims that Ocwen illegally foreclosed on borrowers, ignored customer complaints, mishandled borrowers’ money, and failed at the most basic of mortgage servicing actions, Ocwen asked a federal judge to declare the CFPB unconstitutional and toss out the CFPB’s lawsuit against the company.

The issue raised by Ocwen is the whether the structure of the CFPB is unconstitutional, which is also currently in question in a legal battle between the CFPB and PHH.

Both PHH and Ocwen have argued that the CFPB is unconstitutionally structured because the bureau’s director has too much power and that the bureau operates without supervision or oversight.

Earlier this year, PHH’s case got a boost of its own when the DOJ elected to join its case against the CFPB, arguing on behalf of the U.S. government that the CFPB’s structure is a violation of the separation of powers and should be ruled unconstitutional.

Ocwen also sought to have the DOJ join its fight, asking for the DOJ to be allowed to contribute to the case so the court can “consider fully the Attorney General’s conclusion that the CFPB is unconstitutionally structured.”

And earlier this week, the judge overseeing the case ruled in Ocwen’s favor, meaning that the DOJ will now be allowed to join the case and weigh in on the constitutionality of the CFPB it if chooses to.

During Ocwen’s call with investors this week as part of its second quarter earnings release, Ocwen CEO Ron Faris announced the judge’s decision, stating that the judge invited the “U.S. Attorney General to share his views on the constitutional issues raised in our motion to dismiss.”

In a separate statement, Ocwen spokesperson John Lovallo said that the company “looks forward to the Attorney General’s views on the constitutional issues raised in our motion to dismiss.”

It should be noted that the judge’s ruling simply allows the DOJ to contribute to the case if it chooses to. There’s no guarantee that the DOJ will elect to join the case, but given the agency’s previous declaration that the CFPB is unconstitutionally structured, it is likely that the DOJ will contribute to the Ocwen case and make a similar declaration about the CFPB.

When asked by HousingWire whether it planned to join Ocwen’s challenge, the DOJ said that it declines to comment on the issue. 

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