Understanding Today’s Connected Borrower

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The unique challenges facing minority first-time homebuyers

In this episode, we interview Timothy Demry, a real estate agent in San Francisco’s Bay Area, about his experience serving minority first-time homebuyers.

How modernized servicing creates customers for life

Servicers must be powered by nimble technology to be heroes to borrowers, stalwarts to investors, and stewards of consumer protection to regulators.

Savvy lenders are already preparing for the next valley – Here’s how

Despite increased rate of tech adoption, the industry still has room for continued tech development and usage. Read here to learn more about key technologies that lenders need to give more attention to.

Politics & Money

Supreme Court hears arguments on CFPB constitutionality

Overturning “for cause” provision could bring structure of other government agencies into question

The Supreme Court heard oral arguments on Tuesday in the case that will determine the independence of the Consumer Financial Protection Bureau by deciding whether the president is able to fire its director at will.

The 2010 law passed by Congress in the wake of the financial crisis said the head of the CFPB, who serves a five-year term, may only be removed by the president for “inefficiency, neglect of duty, or malfeasance in office.” It was intended to insulate the director from political pressures.

The question addressed in oral arguments in Washington D.C. was whether that “for cause” provision placed an unconstitutional burden on the president’s ability to exercise executive power and, if it did, whether that part of the law could be changed while leaving the bureau in place.

The court now takes the matter under consideration and is expected to rule by the end of June.

Chief Justice John Roberts, who is likely to be the swing vote in the case, suggested during arguments that the for-cause removal didn’t place that much of a burden on the president, according to CNBC.

“Just take inefficiency,” Roberts said. “The president might determine that a particular approach of the agency to consumer protection was not as efficient as another approach. And I don’t know why you couldn’t say that that’s a ground of efficiency.”

The CFPB case is being watched by the real estate and mortgage industries, who have spent a decade – and billions of dollars – adapting to the new regulations the bureau created.

The National Association of Realtors, the Mortgage Bankers Association and the National Home Builders Association filed an amicus brief last year urging the Supreme Court to consider possible disruptions to the economy and the housing market when making its decision.

The groups argued that while some problems might exist with the bureau’s structure, invalidating the CFPB as a whole would cause undue economic turmoil and instability.

“Drastic action to invalidate the CFPB could have a broad impact on U.S. consumers extending far beyond the question of bureau leadership,” NAR President Vince Malta said.

The CFPB case also is being watched for the implications the decision might hold on other federal agencies such as the Securities and Exchange Commission and the Federal Trade Commission. If the court overturns the for-cause provision, it would effectively reverse its 1935 decision in Humphrey’s Executor v. U.S. that upheld a similar standard for members of the FTC.

“It did not seem after arguments that a majority of the court was eager to do so,” CNBC said.

As the case progressed through the court system last year, CFPB Director Kathy Kraninger sided against her own bureau.

“The bureau should adopt the Department of Justice’s view that the for-cause removal provision is unconstitutional,” she said.

Sen. Elizabeth Warren, a Democratic presidential candidate, was the moving force behind the creation of the bureau, which she saw as protecting consumers as they utilized financial products much like other federal agencies protected them when they were purchasing appliances.

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