There’s no argument that this provision prohibited fee-splitting
in which a 2nd party receives a portion of the fee charged by a
brokerage or title company without having provided any of the services. However, HUD interpreted this provision more
broadly to mean that RESPA outlawed unearned fees, overcharges and mark-ups
charged and retained by a brokerage or title company, and which were not split
with any other person. When some brokerages
challenged this interpretation in court, some courts agreed and others did not. The U.S. Supreme Court just issued its
decision settling this conflict in Freeman
v. Quicken Loans, Inc., No. 10-1042, and HUD’s interpretation lost.
In the Quicken Loans
case, the fees being disputed under the broader interpretation of RESPA were certain
loan discount fees, loan processing fees and loan origination fees. The petitioners didn’t allege that Quicken
Loans ever split any of these fees with another party.
In a unanimous decision, the Supreme Court held that RESPA
Section 8(b) is limited to the ‘splitting of fees paid for settlement services’
and therefore does not prohibit a single provider’s retention of an undivided
unearned fee. This decision rightly limits
the scope of Section 8(b) to a straightforward reading of the statute and
nothing more.
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1 comment :
Ecstatic adoration to constructive criticism.
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