Kerri Panchuk, Housing Wire
The U.S. Supreme Court ruled unanimously in favor of Quicken Loans, holding that the lender could charge loan discount fees under the Real Estate Settlement Procedures Act.
Mortgage refinancing typically lowers monthly payments. Such a service, of course, comes at a cost and how those are charged is dictated by a subsection of RESPA.
The ruling for Quicken Loans challenges the way the U.S. Department of Housing and Urban Development and theConsumer Financial Protection Bureau interpret provisions in Section 8(b) of RESPA.
The specific legal question posed to the court was whether a provision of RESPA Section 8(b) that bans service providers for charging fees for services they did not actually render applies only when the unearned fees are split between two or more parties.
Quicken argued the homeowners’ claims could not survive under RESPA since the mortgage lender did not split the fees with another party, and the provision only applies when there is actual fee-splitting.
The Supreme Court agreed with Quicken, holding that “in order to establish a violation of section 2607(b) under RESPA, plaintiff must demonstrate that a charge for settlement services was divided between two or more persons.”
Before reaching the Supreme Court, three lower courts held that the provision applies to all unearned fees whether they are retained by a single-entity or multiple parties. Quicken Loans said several other courts reached different holdings on the issue, which sparked appeals up to the Supreme Court.
The original plaintiffs, the Freeman, Bennett and Smith families, secured loans in Louisiana from Quicken Loans and soon found themselves facing “loan discount fees” at the closing of their mortgages, according to legal briefs filed in the case.