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NAR to Supreme Court: Don’t Hurt Real Estate in CFPB Case

A case before the highest court questions whether the Consumer Financial Protection Bureau is constitutional – but the 30-year mortgage could be collateral damage.

WASHINGTON – The Supreme Court will consider a constitutional challenge to the Consumer Financial Protection Bureau (CFPB) in the coming months, and its decision could impact the real estate industry.

As a result, the National Association of Realtors® (NAR), Mortgage Bankers Association and the National Home Builders Association filed an amicus brief – a statement by an uninvolved party that offers information, expertise or insight – urging the Supreme Court to consider possible disruptions to the economy and housing market in any decision made.

The groups – which comprise some of the most influential entities in the real estate industry – specifically argue that while there may be problematic provisions surrounding the Bureau’s leadership structure, invalidating the CFPB completely would 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 Court will consider whether the presidentially-appointed CFPB director holds undue power given the President’s limited authority to remove the individual from office. Petitioner Seila Law argues the bureau’s structure violates the Constitution’s separation of powers provisions.

Over the past decade, the CFPB has issued various regulations impacting the real estate industry and consumer mortgages. While the real estate industry engaged with the Bureau during its rulemaking processes, it has also invested billions of dollars to comply with CFPB’s new rules, regulations and related guidance.

“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 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.”

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