The United States Supreme Court
delivered a major win to the residential mortgage loan industry when it
unanimously ruled that the prohibition under the Real Estate Settlement
Procedures Act ("R.E.S.P.A.") on splitting fees for settlement
services requires at least two or more persons to satisfy the statutory requirement
of Section 8(b), 12 U.S.C. § 2607(b). Its ruling in Freeman, v. Quicken
Loans, Inc., No. 10-1042, May 24, 2012, also made it abundantly clear that
Section 8(b) does not provide a cause of action for borrowers to challenge
either the reasonableness of fees charged by lenders or whether such fees are
even for services actually provided, both of which concepts were advocated by
H.U.D. in its Statement of Policy 2001-1 and by the Federal government in its
amicus brief filed in the case on the side of the plaintiffs.
The provision of R.E.S.P.A. at issue was Section 8(b), 12 U.S.C. 2607(b), that
prohibits giving and accepting "any portion, split or percentage of any
charge made or received for the rendering of a real estate settlement service .
. . other than for services actually performed." The Court was asked to
consider whether, to establish a violation of Section 8(b), a plaintiff only
had to demonstrate that a charge was unearned even if collected by a single
settlement service provider (an undivided unearned fee) or whether the fee must
be shared by a provider with one or more other persons who did nothing to earn
This provision is enforceable through actions for damages brought by consumers
of settlement services against any person or persons who violate the provisions
of Section 8, with recovery set at an amount equal to three times the charge
paid by the consumer for the settlement service at issue. 12 U.S.C. § 2607(d)(2).
The plaintiffs in the case were three married couples who argued that Quicken
Loans charged them fees (specifically, loan discount, processing and loan
origination fees) for which no services were provided.
Access the full version of "U.S. Supreme Court Delivers a
Brushback Pitch to Federal Regulators in Freeman v. Quicken Loans, Inc."
with your lexis.com ID. Additional fees may be incurred.
If you do not have a lexis.com ID, you can purchase this commentary and additional Emerging Issues Commentaries from the LexisNexis Store.
Lexis.com subscribers can access the complete
set of Emerging Issues Analyses for Banking & Financial Services
Law and the Banking & Financial Services Area of Law page.
For more information about LexisNexis
products and solutions connect with us through our corporate site.