NAR, Housing Groups Urge Caution in CFPB Challenge

December 19, 2019

The National Association of REALTORS®, along with the Mortgage Bankers Association and National Association of Home Builders, is urging the U.S. Supreme Court to carefully weigh possible disruptions to the economy and housing market as it considers a constitutional challenge to the Consumer Financial Protection Bureau. NAR and the housing groups filed an amicus curiae brief to the Supreme Court.

The housing groups acknowledge in the brief that the CFPB’s leadership structure can be problematic, but they argue that invalidating the CFPB as an entity could cause “undue economic turmoil and instability.”

“Dodd-Frank was designed with an explicit intent to ‘promote financial stability,’ a benefit its authors believed would extend to U.S. consumers and our nation’s economy,” says NAR President Vince Malta. “If that mission is to remain consistent, the Supreme Court should honor the wishes of Congress and act deliberately to avoid unnecessary market disruption. Drastic action to invalidate the CFPB could have broad impact on U.S. consumers extending far beyond the question of Bureau leadership.”

The Supreme Court is to consider the constitutionality of the presidentially appointed CFPB director position, where a statute in the Dodd-Frank Act limits the ability to remove the director except for cause. The legal challenge argues that such a provision violates the Constitution’s separation of powers provisions.

The CFPB has issued various regulations affecting the real estate industry and consumer mortgages.

“Today, nearly all residential real estate finance transactions in the United States are undertaken in reliance on the rights, obligations and protections set forth in… guidance issued by the CFPB,” the housing groups’ amicus briefing reads. “Striking down [its] entirety, or declaring it unconstitutional without addressing severance, would eliminate detailed, technical regulations that govern past and future real estate finance transactions... Such an outcome would cause significant disruption to the American economy, overturning regulatory guideposts, upsetting settled expectations and creating substantial regulatory uncertainty in our housing markets… The Court should avoid causing such harm.”

NAR's policy on the CFPB leadership structure is as follows:

  • That NAR continue to support the existence of a federal agency such as the Consumer Financial Protection Bureau designed specifically to protect consumers’ interests with regard to financial products and services. Further, it recommends that NAR support policy proposals that restructure the CFPB or similar agency from the current single-director arrangement to a qualified five member board with no more than three members from one political party. The existing independent agency structure and funding sources for an agency such as the CFPB should be preserved. (May 2017)

Read the amicus brief.