On May 24, 2012, the Supreme Court of the United States issued a unanimous decision in Freeman v. Quicken Loans, Inc., No. 10-1042, 566 U.S. __ (2012), resolving a split between the Second and Fifth Circuits as to whether Section 8(b) of the Real Estate Settlement Procedures Act ("RESPA") prohibits a settlement-service provider from charging a borrower an "unearned" fee, i.e., a fee for which the settlement-service provider in fact provides no service to the borrower. The court held that such unearned fees are not prohibited by the statute; rather, Section 8(b) is violated only where a provider splits a portion of a settlementservice fee with one or more third parties.
Section 8(b) of RESPA states that "[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service ... other than for services actually performed." RESPA § 8(b), codified at 12 U.S.C. § 2607(b). The plaintiffs in Freeman alleged that Quicken Loans ("Quicken") had violated this provision by charging them various "loan discount," "loan processing" or "loan origination" fees without providing any services in return for the fees. According to the plaintiffs, by charging these unearned fees, Quicken had "accepted" a "portion" or "percentage" (specifically, the entire "portion" or "percentage") of a "charge" made to the plaintiffs "other than for services actually performed," thus violating Section 8(b), even though no "portion, split, or percentage" of the charge ever was shared with a third party.
The interpretation urged by the Freeman plaintiffs was not without support. A policy statement issued by the Department of Housing and Urban Development ("HUD") in 2001 interpreted...
