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Freeman v. Quicken Loans, Inc.

Summarized by: 

Date Filed: February 21, 2012
Case #: 10-1042
626 F.3d 799 (5th Cir. 2010)
Full Text Opinion: http://www.ca5.uscourts.gov/opinions/pub/09/09-30902-CV0.wpd.pdf

Consumer Credit: (Whether ยง 8(b) of the Real Estate Settlement Procedures Act (RESPA) prohibits a real estate settlement services provider from charging an unearned fee only if the fee is divided between two or more parties).

The Freemans, Bennets, and Smiths (collectively Petitioners) each obtained mortgages for the purchase of residential property from Quicken Loans. Quicken charged the Petitioners a loan discount fee at closing, however no loan discount was actually given. Petitioners filed suit alleging that Quicken violated RESPA by imposing an unearned fee. The district court acknowledged the split in decisions on cases such as this and found that RESPA § 8(b) only applied to divided fees in accord with decisions made by the Fourth, Seventh, and Eight Circuits. The Fifth Circuit Court of Appeals affirmed.

Petitioners argue that RESPA §8(b) should not apply only to kickbacks, as found by the Fourth, Seventh, and Eight Circuits, but should apply to all unearned fees. Further, Petitioners argue that the interpretation of the Fourth, Seventh, and Eighth Circuits rest on a misreading of the language of § 8(b), reading the phrase “no person shall give and no person shall accept…” as requiring that two parties take place in the act for there to be a violation. Petitioners believe that the language of § 8(b) can more naturally be understood as a broad prohibition on the bank giving unearned fees to third parties or the bank accepting unearned fees.