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What You Should Know About CFPB Appeals

Appeals handled by the Consumer Financial Protection Bureau (CFPB) present issues one should be concerned with whether one works in real estate or business. Back in March of this year CFPB Director Cordray presided over the oral arguments in the first appeal hearing of an administrative action. In the case heard on appeal two companies were alleged to have given and received millions of dollars in payments through a “captive” mortgage reinsurance agreement. The argument was that these payments constituted kickbacks that violated the Real Estate Settlement Procedures Act. The facts of the case itself are not that important for those not involved in the case. Rather, what is important is the way the appeal is handled.

CFPB’s Rules of Practice for Adjudication Proceedings

The rules for these appeals are laid out in the CFPB’s Rules of Practice for Adjudication Proceedings. Specifically the appeals in question are appeals of an administrative law judge’s recommended decision to the CFPB director. A party who wants to appeal a recommendation must go through this process if it wants judicial review even though the recommendation does not become final until after the director approves it. The rules also provide for strict and short timelines in this appeals process. This may seem like a positive aspect as many parties wish the legal process did not typically take so long. However, it is possible that these short turnaround times will ultimately favor the agency over other parties. Other rules also appear to favor the agency fairly heavily. This is mainly because they grant the CFPB director broad discretion in reaching a ruling.

Examples of Director’s Broad Discretion

The rules grant the director broad discretion in reviewing recommended decisions. They do not provide a standard of review that the director is required to follow. They allow the director to determine matters (and even raise matters) outside the notice of appeal at any point before he or she issues a final decision. The director has the authority to schedule oral arguments whenever the director believes it would be helpful, and those arguments can be as long or short as the director would like. Whether oral arguments are held is completely up to the director, although it can be requested by a party on the first page of its opening brief. What this all means is that parties do have the ability to appeal, but the director has extraordinary discretion when it comes to deciding the outcome of the appeal.

A Party Can Request Reconsideration

A party can request reconsideration of the director’s final decision within 14 days of the service of the final decision. However, the only basis for one of these requests is if some new issue or matter has come up that the party never had the opportunity to argue to the director previously. The parties can seek judicial review of the director’s decision. The CFPB rules provide very little guidance regarding that procedure.