Earlier this week, the Consumer Financial Protection Bureau (“CFPB”) won an important court ruling in a long-running case against student loan securitization trusts. The case has a long (and for the CFPB, somewhat ignoble) history. The CFPB first filed suit against 15 Delaware statutory student loan securitization trusts (the “Trusts”) in September 2017. The complaint alleged that the Trusts, through the actions of their servicers and sub-servicers, engaged in unfair and deceptive debt collection and litigation practices. Along with the complaint, the CFPB filed a purported consent judgment that the CFPB represented to the Court had been executed by the defendants. As we’ve previously discussed, in an embarrassing setback, the district court denied the CFPB’s motion to enter the consent judgment, finding that the attorneys who executed it on behalf of the defendant Trusts were not authorized to do so by the proper trust parties (and that, with respect to at least some of the Trusts, the CFPB knew that the proper parties had not consented). The CFPB was therefore left to litigate a case that it thought it had settled. Subsequently, after the Supreme Court held that the CFPB’s structure was unconstitutional because it was headed by a single director removable by the President only for cause, the district court dismissed the CFPB’s case without prejudice, holding that the CFPB did not have the power to bring the case when it did due to its structural defect. We discussed that ruling here.
Continue reading on Mayer Brown’s Consumer Financial Services Review blog.