PHH Mortgage Corporation, a mortgage origination processing company embroiled in a legal battle over the constitutionality of the Consumer Financial Protection Bureau’s (CFPB) structure, won a small victory in the U.S. District Court of Southern New York in a putative class action case regarding the automatic charging of fees related to the continual inspections of properties in default. The federal district court shrank the putative class on March 30th by removing allegations of fraudulent practices related to auto-debiting certain fees, leaving only breach of contract claims moving forward.
PHH’s practices have led to a litany of litigation by aggrieved customers and federal agents over the past few years. Recently, the mortgage company was forced to reduce its workforce by one-third to counterbalance portfolio losses. In an unrelated matter, PHH is also defending its mortgage insurance practices against the CFPB in a high stakes affair where the agency’s own constitutionality is a question before the D.C. Circuit Court. With so many parties weighing in on the future of the federal government’s consumer finance enforcement agency, the fate of online lending regulation is partially in the hands of a mortgage service provider in New York.