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alright guys welcome hope you're doing well if you didn't get a chance to join us on the webinar we're doing a little synopsis hear the recording of the webinar is also available and there were some great questions from the audience so that might be helpful but this will be a little cleaner and a little quicker so you know we know the recent PHH decision is in everybody's talking about it in our industry the idea of the CFPB having some constitutional issues probably doesn't surprise all of us I think you know if you grew up understanding checks and balances you wondered you know maybe how the organization like the CFPB would exist in that world so to speak but we're going to jump into the decision spend some time talking about it we're really going to go back to the very beginning and talk about where this all started because we really have kind of a lot going on with this topic if we haven't met before there's some background information about me on the screen but I currently run deal and associates also known as deal mortgage training and compliance and we serve the industry that I worked in for many years and we strive to provide good information so that when you're doing whether it's FHA underwriting training or PE or siiii you're getting good info you can really put to work and use and it's not just you know time that you're burning but there's value to it working in the industry and you may know this from your personal experience it's probably not hard to think of a time when you felt like you were in a course or training where it wasn't a good use of your time and that's what we strive to do so we're always talking about these kind of topics like the ph h decision history of the company in 30 seconds we started training conventional underwriters how to underwrite FHA loans in 1983 we added the safe at PE cen and we think that your time matters and even though you have to meet these requirements that that your time is valuable and you should spend it doing things that will give you information that you can use day to day so that's what we focus on and and obviously to the right you know that compliance is a big part of our world especially since the crash and that's uh probably a perfect lead-in to talking about this case so we'll spend a few minutes framing this out why it's a great story it is a high courtroom drama at its finest and it affects all of our world so to speak and we're very vested in this industry that we serve and you know these these strike a chord with all of us when things you know happen like the creation and the implementation of the CFPB as well as rulings like we saw here with PHH so we'll spend some time talking about that will frame it out a little bit at the beginning and frame out a little bit about both sides then we're gonna spend a little bit of time after that talking about what the result was in other words once we have this decision what does it really mean and we're gonna do that by actually going in and digging into the ruling itself along the way just as members of the industry you start to think well how is this going to affect us moving forward and what is the message that we take forward so we'll spend some time on that as well excuse me if you go back to the beginning you really have to go back to January of 2014 we know that the ph h case resulted initially in a fine to ph h of six million dollars and that both ph h and the CFPB weren't completely happy with that result so it was appealed and where does the appeal go it goes back to the CFPB and the current director and that fine gets increased to 109 million dollars and so what happened on April twelfth the opening arguments of this challenge if you will to the most recent ruling at that time and really you had an amazing scenario here this was April twelfth there was a buzz around DC like nobody's business the courtroom was packed and we had really strong litigators on both sides of this argument on phhs side you had Ted Olson and also Mitch kiter in his firm you know some really big names in DC representation if you will the mortgage industry and on the other side of the table you also had some big names with the CFPB's lead litigator and I think it's lawrence de Milles but he was also with the FTC and was responsible it was involved with the do-not-call legislation so you know big-time litigators if you want both sides Ted Olson we joke that he handled some little cases like Apple versus the FBI and Bush versus Gore in the hanging Chad argument in in Florida for the recount so you know you really do have to the two of the top people in the field arguing both sides of this now on your screen you see the slide this is what Ted Olson says and you know it was amazing I'm sure the folks that we're in that courtroom were we're probably silent by these words but you can see how it starts out thank you honor me please may it please the court the the over arcing and grievous separation of powers argument presented by the CFPB arises in the context of an astonishingly capricious and a lawful agency decision and then he goes on to say the director ran roughshod over clear provisions of federal law what are we talking about here raspa section 8 and he prohibited conduct expressly authorized by that law in other words respite does allow services to be provided and charges to be made respite doesn't allow you to mark those charges up or pay people that aren't doing work that's commensurate with that so but in this case pointing right back to captive reinsurance being you know one of those services in mortgage insurance be one of those services that could be you know considered in this category about settlement costs it also says that he also said that that that agency director disregarded retro actively overruled decades of administrative and judicial application of the law and industry reliance on it there was guidance that HUD issued based on a request from countrywide at the time I believe it was in 97 and it it talked about how captive reinsurance could be done in a way that would be compliant so that's an example of that and then it also says i disregarded the statute of limitations in the original six million dollar fine the judge that handle that case had mentioned the statute of limitations when arriving at that six million dollar number when it went to 109 that sets you to limitations was ignored if you well are not considered so and then you see impose draconian remedial punishment that Congress did not give the powers to this agency for under these circumstances so you can see these words and you know these are weighty words these these mean a lot especially to this company and to everybody in our industry we know this is the first significant or serious challenge to the CFPB and it goes right to the heart of the constitutionality of the group so that's how this all started and if you listen to the closing remarks which I will attempt to give you guys as well in the original form here I'll flip over to this and and pause the screen briefly so you might see my screen flip around but I think you'll find it's well worth it when you hear the words and the actual recording from the courtroom that day so listen up I'll turn this up and then we'll jump back into the slides but this is uh this is how how Ted Olson is closing out this argument and really says a lot again kind of going back to the constitutionality of this of this whole issue and the constitutionality the agency prone to separation of powers is appropriate morrison vs olson that is what the court is great for the united states did is applying a holistic approach to talk about the fact that the Independent Counsel there was appointed to a limited term for a limited purpose and whether out that decision is right or wrong in retrospect comforter with a very open strength of that by the Supreme Court of we have to look at the entire picture let's look at the entire picture in this case you have an agency Oh drama interrupter that doesn't have to consult with anybody else the LPC some of those other agencies to only have three people from work great on the agency is a division of authority there's scenario hookers appointments and Perez different times so this is all power concentrated in one person the President does not help power to remove except for efficiency malfeasance or some violation of alara something like that president can't remove this supervillain ex-president yet until his term is over if they're the idea of appointment he continues on he doesn't have to go to Congress with respect to his planners he doesn't have a consult with the executive branch represented communications of Congress he entirely better in ways they are independent restrictions on a federal employees on an entire evil and consent their salaries this is if you want an hour to run this country this this agency took over the responsibility of something like I went the storm of different other agencies with statutes all the way across book so very little Dorrit's the hyper Social Security which is not lying being a ma which is a limited degree of authorial assure with the port of advisers including her LOL Treasury the Secretary of Treasury and so on and so forth and limited scope with respect to be GME's this is a very broad grant of authority over many many different statutes to one individual who doesn't have to pay any attention to the president Congress got the game anyone and what we see here is a violation systematically a statute after statute after statute to impose a 109 million dollar well the outer loop on this industry of his company that was following the law that his unconstitutional it's unconstitutional agency and the steps that were taken are unconstitutional the decision of this directory cannot be upheld the decision must be better than I do hope to the proper way among his statutory violations because a very very important to this entire industry reinsurance apparent legitimate business it is very important for certain people the existence of reinsurance is not against the law it's not prohibited by a restaurant and referrals are not prohibited only where there is not relation for actual services so it's very very important that the courthouse where there's a violation of the statute by this director of the lesser violation of the statute and the director who is implanted by the president pursuant to a provision that we submit is unconstitutional he cannot hold that job you cannot strip the removal provisions and say go back and keep doing because he was went into a position they had those removal restrictions on others they're unconstitutional EG and I hold that office someone else will have to be appointed to an agency that Congress should come back and create a constitutional way thank you thank you can also thank all counsel for excellent briefs and arguments including all the amicus briefs which were very helpful case is submitted all right so there you go we listen to the actual recording of those words being spoken you can see the keys that we really think were important on the screen but these are strong arguments weighty words and that's what Twp the decision on the 11th this was all April twelfth now when you take a look at what the decision is and you start to dig into it when you look at the very beginning about what was written you see what you see on the screen before that you see a you know some of the players that are involved here and obviously everybody in our industry in the mortgage industry in every related industry is represented you know as part of this so you know you do have na our national association of realtors that were represented other companies banks as well that we're listed but you know when you see what you see in front of you right now you start to get right again back to that constitutionality of this and you see the you know the intent I guess of the structure within our government in what we know is basic maybe more 101 stuff from civics classes but you can see that this kind of frames that out when you dig into it what you start to see talk about is you know there are agencies that are controlled by the president where the president has power over that agency there are also agencies that Congress creates in that case there's there's a typically either oversight or there's more of a team approach if you will to running that agency and not a single director without any checks and balances so the the really telling quote at the bottom really says it all therefore no independent agency exercising substantial executive authority has ever been headed by a single person until now so again weighty words in this decision that was handed down now there's a couple of key things here PHH did argue that the structure or the single director format was unconstitutional because there wasn't a check there and the court agreed with this so there's the good news in what you see in a lot of the headlines right now is the CFPB is unconstitutional right in it and it does say that in here but it also says what's the fix okay a ph h and their argument talked about you know shutting down the CFPB and in this case the quote that you see on your screen is directly from this decision talking a narrower remedy in other words not all of what was hoped for maybe on the company side or maybe some industry groups as well so what will happen is it won't affect the ongoing operations that's why you're seeing some things right now with you know some of the proponents of the very strong proponents the CFPB like Elizabeth Warren talking about the fact that this really doesn't make any difference so you really see both sides coming out here you see the ones that are more in favor of a small government talking about the fact that this is an important step forward and some of the proponents of really the CFPB a clue d Elizabeth Warren talking about the fact that this won't affect everything and in reality it's a little bit of both so what will happen the president will be the check in other words this will kind of the director will be tucked under the executive branch and there isn't cause required to remove that director so in other words if the president chose to that they could remove the director at any time for any reason and not only for certain reasons which is really where it's kind of pigeon-holed right now if you will at least in our humble opinion so what happens to the company in this case and 109 million dollars first of all the whole industry is watching this and overall what we've heard from a lot of people in the industry this is a good first step it is important for there to be give and take when it comes to agencies that regulate industry right you know we know of instances where either agencies maybe we feel they've overreacted or we've seen sometimes companies or even banks that we felt really you know stepped out of out of the bounds of what they should do either one of those is not a good thing so you know the overall baseline that we've gotten from industry is that most people feel like this is a good thing it's a step in the right direction it doesn't change everything but it but it is an important step in it is the first challenge so the three points that we're addressed in this we're section 81 and talked about the fact that services can be right at settlement services can be provided they can't be you know marked up arbitrarily but you know if their market rate then it's it's not seen as an extra cost to the consumer and again this is you'll hear a lot of attorneys and experts weigh in on this this is just our our humble opinion our take on this so take it for what you will if you need legal advice certainly contact your attorneys or regulators in those cases so again kind of talking about some opinions here the CFPB departed from the prior interpretations in making the 109 million dollar decision if you will and the court agree that their due process rights were violated in doing that and what the what the court said is that the CFPB would be free to come back and show that more than market value was paid for these services and if that's the case then that could be the basis of you know any fines or penalties against the company but but that would have to be really the ba is of it in other words show that more than market value is paid and also would be subject to that three-year statute of limitations which you know the 109 million dollar number did not consider so again some significant pluses here some significant accomplishments now what does this mean going forward well we know rest but has to deal with settlement services we know there have been decisions on things or at least a lot of talk in communication about things like marketing services agreements so really you're going to hear a lot in the coming days about what this really means to all of those next thought processes that we have that relate to this and I right now our opinion is you're really seeing the court say that respa is being interpreted as it was written in the books and interpreted by HUD so if there's going to be anything outside of that realm then it could be subject to the same you know same vacation of you know the same actions that you're seeing right now from this appeals court so also you start thinking about this a little further and you think well is this really going to push the CFPB to spell out more of what behaviors they want to see and what rules you know that would govern those you know the CFPB cannot you know that the rules of resp are there the interpretations of HUD are there you know certainly they can you know look at those items as well but if they want to prevent certain activities is this really going to push them to spell out those types of things they have the ability to write new rules right so is this going to push for what some in the industry have called for which is you know tell us what these rules are that you want us to follow put these in writing give us this guidance until now there's certainly been a you know criticism of the agency of ruling by enforcement so will this push them to put more into the rules certainly could and will also be all watching to see what the future interpretations the developments and really how this all moves forward so we we appreciate you spending some time with us today we encourage you to read what the court decided it's a part of the webinar and and it really I think being a player in this industry you know you want to take a look at that and see what that means and we also look forward to having more ongoing communications about this and all the myriad of things that are going on in our industry well we know we have hum de changes coming up we know we have a new 1003 we have a variety of different things down the road we certainly try to put that into everything we do whether it's PE or siiii or any of the training and the services that we provide but we appreciate you joining us today we hope the information was helpful to you and maybe getting us all on the same page giving us some context a little bit and we wish you guys a great rest of the year and finishing the year strong so great industry and a lot of good things going on certainly some interesting developments as it relates to PHH thanks a lot everybody and take care you you