High court to decide case over RESPA fees

The U.S. Supreme Court agreed Monday to clarify the scope of a federal law meant to protect homebuyers from being overcharged for real estate settlement services. The question the court will resolve is whether a provision of the Real Estate Settlement Procedures Act banning service providers from charging for services they did not actually render applies only when the unearned fees are split between two or more parties. Three circuit courts have ruled that the law applies to any unearned fees, whether retained by a single defendant or multiple defendants. The Department of Housing and Urban Development’s position is in line with these rulings. Four circuit courts have issued opinions taking the opposing view, ruling that “this provision prohibits the acceptance of unearned fees only when those fees are divided with a culpable third party, as in a kickback arrangement,” said the high court in its order granting the writ of certiorari in the case, Freeman v. Quicken Loans. A similar attempt to have a case against Mortgage Electronic Registration Systems heard by the Supreme Court was not successful. The case, brought by Louisiana residents Tammy Foret Freeman and Larry Scott Freeman, alleges Quicken charged them a $980 loan discount fee on a mortgage loan in 2007.  Though that fee is normally imposed in exchange for a lower interest rate, Quicken did not reduce the Freemans’ interest rate, they charge in their complaint. Quicken Loans acknowledged charging the loan discount fee but denied the remainder of the allegations. “Quicken Loans has never charged unearned fees and never will,” said the firm in a statement earlier this year. The Obama administration asked the high court to accept the home buyers’ appeal and overturn a lower court ruling in favor of Quicken Loans, which was upheld by the 5th U.S. Circuit Court of Appeals. Write to Liz Enochs.