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LEGAL NEWSLINE

Friday, March 29, 2024

Navient to judge: Pay no attention to CFPB's argument for ratification

Federal Court
Kraningerkathleen

Kraninger

HARRISBURG (Legal Newsline) – The battle continues over whether the Consumer Financial Protection Bureau can pursue a lawsuit it filed years ago when its structure was unconstitutional.

Navient Corp., which has been fighting the CFPB for three years, recently told a Pennsylvania federal judge not to listen to the agency’s argument for ratification. It filed a court document Sept. 9 that says the CFPB’s recent argument misses the mark.

Because the U.S. Supreme Court earlier this year found the CFPB’s executive director couldn’t be removed at will and wasn’t even answerable to the President, its decision to sue Navient should, in a sense, not count, Navient says. It’s up to Judge Robert Mariani to decide new CFPB director Kathleen Kraninger can ratify the lawsuit or whether a new one would exceed the statute of limitations.

Navient says two other decisions allowing ratification do not apply to its case. CFPB’s case against Chou Team Realty did not deal with the statute of limitations issue because the lawsuit was only seven months old, Navient says.

As far as the ratification of an enforcement action against the Law Offices of Crystal Moroney, the judge in that case found “the ratifier must, at time of ratification, still have the authority to take the action to be ratified,” Navient wrote.

However, because the court found ‘no limitation that would prevent Director Kraninger from bringing an enforcement action against respondent at the time (of ratification),’ it ruled that her ratification was valid,” Navient wrote.

“The same analysis requires judgment for the Defendants here, because at the time of ratification Director Kraninger lacked authority ‘to take the action to be ratified’ due to the expiration of the statutes of limitations governing the CFPB’s claims.

Navient filed a motion for judgment on July 10, some three years after the CFPB filed suit against it. The lawsuit claims Navient pushes forbearance on students struggling to pay back loans.

The company has claimed it is an effort to regulate its practices through litigation and actual education agencies – and not the CFPB, which tracks financial institutions – should be in charge of any changes.

Navient is armed with a former CFPB lawyer who will testify against the agency, much to CFPB’s dismay.

Navient’s motion seeks judgment on 11 claims. It complains that the feds are attempting to impose new regulations through its litigation against Navient rather than going through a proper rulemaking procedure.

Part of that change would be requiring servicers to go through a question-and-answer process designed by the CFPB.

“(T)he CFPB seeks instead to discourage access to a federal prescribed benefit – forbearance – in favor of its preferred option, IDR,” the motion says.

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