RESPA Prohibition Against Fee-Splitting not Applicable to Undivided Unearned Fee

Posted by NCBRC - May 25, 2012

The Supreme Court declined to interpret RESPA’s prohibition against fee-splitting as applying to the situation in which fees were charged for services that were not provided but where the fees were not divided between two or more parties. Freeman v. Quicken Loans, No.10-1042, __U.S.___ (May 24, 2012). The three couples who brought separate state  court cases against Quicken Loans which were removed to federal court, alleged that Quicken charged fees for services it did not provide but did not contend that the fees were split. The court addressed the narrow issue of whether the RESPA prohibition against fee splitting with parties who have not provided any service can be applied in a case in which the entire fee was charged and accepted by a party that did not render any service to the home purchaser; to wit an “undivided unearned fee.” Writing for a unanimous Court, Justice Scalia, found that the language in 12 U.S.C.  § 2607(b), that “[n]o person shall give and no person shall accept any portion, split, or percentage of any charge” meant that the challenged charge had to be divided between two or more persons. The decision was entirely based upon plain language, therefore, the petitioner/home buyer’s arguments relating to policy and intent fell on deaf ears. Additionally, the Court dismissed the prior HUD’s express interpretation in its 2001 policy statement applying section 2607(b) to any unearned fees regardless of division. The Court suggested that home buyers look to other consumer protection laws to seek relief for fees charged when they are not supported by any service provided.

freemanvquicken SCOTUS may 24 2012


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