Clarity on Brokerages’ Administrative Fees

Freeman, et al v. Quicken Loans Inc. No. 10–1042

July 18, 2012

The U.S. Supreme Court provided clarity about administrative fees charged by brokerages when it ruled in favor of Quicken Loans in a lawsuit alleging a violation of the Real Estate Settlement Procedures Act.

At issue was whether fees the lender charged, known variously as loan processing or loan discount fees, violated RESPA. The plaintiffs said the fees didn't lead to a reduction in their loan costs and weren't tied to specific services so they violated RESPA Sec. 8(b)’s prohibition on unearned fees. Quicken countered that Sec. 8(b) applies only to fees that are split with another settlement service provider. Since the fees weren’t split, they didn’t violate RESPA. NAR, siding with Quicken, filed an amicus brief with the Court.

The Supreme Court agreed with Quicken and NAR, affirming that the RESPA provision very clearly applies only to fees that are split with another provider. "In order to establish a violation of RESPA's fee-splitting language, a plaintiff must demonstrate that a charge for settlement services was divided between two or more persons," the court said in its ruling. “Because petitioners do not contend that respondent split the challenged charges with anyone else, summary judgment was properly granted in favor of respondent. We therefore affirm the judgment of the Court of Appeals."

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