CFPB Director Cordray recently denied a petition to modify or set aside a Civil Investigation Demand (CID) issued by the CFPB against PHH Corporation, a leading non-depository mortgage services provider. Although the matter specifically deals with the mortgage lender, the decision acknowledges the precedential value of the determination for future matters, and thus dedicates a portion of the decision to this broader context.
In May 2012, the CFPB served PHH with a CID in connection with its investigation relating to unlawful acts or practices in connection with residential mortgage loans. PHH objected on various counts, and ultimately petitioned Cordray to modify or set aside the CID. (Dodd-Frank provides that the CFPB Director, and not an independent judicial body, is the final arbiter regarding objections to CID issued by the bureau).
In his decision, Cordray emphasized that the purpose of the CID is to “uncover the truth about whether a violation of law has occurred and whether it has caused meaningful consumer harm,” adding that “[h]onest and forthcoming communication . . . is better for all concerned.” Cordray argued in support of the bureau’s broad powers to issue a CID “whenever it ‘has reason to believe’ that ‘any person’ may have documents, items, or information ‘relevant to a violation,’” concluding that each of PHH’s objections (e.g., insufficient notice, the CID being overbroad and burdensome, etc.) were unfounded.
Finally, Cordray added that the decision “may assist in developing other parties’ expectations about how they should handle the CID process” since the decision explains the CFPB’s position on “basic issues likely to arise in many matters about the nature and scope of investigative inquiries and the burden of producing documents, items, and information sought by a CID.”
A copy of the decision may be found by clicking here.