A court ruling has called into question whether Richard Cordray can continue to lead the Consumer Financial Protection Bureau, and whether the agency can enforce rules that have been made during his tenure, including rules that are expected to have a major impact on the mortgage lending industry.

The U.S. Court of Appeals for the D.C. Circuit ruled that President Obama’s three recess appointments to the National Labor Relations Board were unconstitutional. That ruling could have implications for the CFPB, since the President’s appointment of Mr. Cordray also was a recess appointment.

“Time is not the friend of the CFPB with this situation hanging out there,” said Ballard Spahr partner Christopher J. Willis. “Right now, everybody is thinking: ‘Can we challenge everything because the agency doesn’t have an appointed director?’ It gives entities opportunities to challenge anything they want to on the basis that there isn’t a proper director in place. The longer it persists, the worse off the agency is.”

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