On February 20, the U.S. District Court for the Southern District of New Jersey granted the CFPB’s motion to withdraw its amicus brief, but denied the Bureau’s request to strike the brief from the record. The CFPB submitted this motion because the Bureau now “believes” the amicus brief (i) “arguably amends” existing Official Commentary to Regulation Z without fulfilling the requirements of the APA; (ii) it “does not grapple with the factors required by the U.S. Supreme Court before an agency may call for deference to its interpretation of one of its regulations” because the CFPB did not establish the regulation was “genuinely ambiguous” nor evaluate the “proposed interpretation for reasonableness, its character and context, and whether the interpretation implicates the agency’s substantive expertise”; and (iii) implicates “serious due process concerns” because the brief creates a new agency interpretation of Official Commentary to Regulation Z that “could harm the property interests of [the defendant] without providing it with advance notice of that interpretation[.]” The CFPB further indicated that it “wishes to engage in further consideration before taking any positions” regarding if the forward sale and exchange agreement at issue or other “home equity contracts” were credit under TILA, were “residential mortgage loans,” or qualified for the regulatory exception applicable to investment plans.
The CFPB requested the district court strike the amicus brief from the record. On January 15 — prior to the change in administrations — the CFPB filed its amicus brief with the district court taking the position that: (i) certain TILA provisions pertaining to high-cost mortgages and residential mortgage loans were subject to a three-year statute of limitations; and (ii) the forward sale and exchange agreement at issue in the underlying case, despite being styled as an investment and subject to certain contingencies, constituted “credit” by meeting the definition of a residential mortgage loan under TILA and did not qualify for the regulatory exception applicable to investment plans.
The district court held the CFPB was permitted to withdraw its amicus brief; however, the amicus brief will remain on the court’s docket, but it will not be considered as reflecting the CFPB’s current views.
