Freeman v. Quicken Loans, Inc.
626 F.3d 799
| 5th Cir. | 2010Background
- Several couples obtained 2007 mortgages from Quicken Loans and closed with fees labeled as loan discount, loan origination, or loan processing fees.
- Freemans and Bennetts allege the loan discount fee is unearned absent an interest-rate reduction, violating RESPA, while Smiths allege the origination fee is duplicative or an unearned loan-discount-type fee.
- Plaintiffs filed state-court actions, later removed to federal court, and the district court granted summary judgment for Quicken, holding the fees were permissible under RESPA § 8(b).
- The district court consolidated the cases; plaintiffs sought class treatment and appealed the RESPA interpretation, arguing undivided unearned fees are actionable.
- The Fifth Circuit reviews de novo the interpretation of RESPA § 8(b); material facts are not disputed, focusing on the statute's text and scope.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does RESPA § 8(b) prohibit undivided unearned fees by a sole provider? | Freemans/Bennetts contend undivided unearned fees violate § 8(b). | Quicken argues § 8(b) requires fee splitting between two parties to be actionable. | No; § 8(b) requires two parties to share a fee to be actionable. |
| Should HUD's 2001 Policy Statement receive Chevron deference on § 8(b) interpretation? | HUD interpretation should be given Chevron deference and adopted. | Statutory text is clear; HUD statement lacks force of law and deference is inappropriate. | HUD statement is not due Chevron deference and is unpersuasive. |
| Is RESPA § 8(b) interpreted to ban undivided unearned fees by reading the statute alongside § 8(a) and RESPA's purpose? | Undivided unearned fees undermine RESPA's anti-kickback/consumer-protection aims. | Statutory text limits prohibitions to kickbacks and similar arrangements, not all unearned fees. | Statutory text does not ban undivided unearned fees; RESPA is an anti-kickback statute. |
Key Cases Cited
- Cohen v. JP Morgan Chase & Co., 498 F.3d 111 (2d Cir.2007) (undivided unearned fees actionable under § 8(b) per Cohen)
- Boulware v. Crossland Mortgage Corp., 291 F.3d 261 (4th Cir.2002) (fee splitting prohibited; sharing required)
- Krzalic v. Republic Title Co., 314 F.3d 875 (7th Cir.2002) (anti-kickback construction of § 8(b))
- Krzuse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49 (2d Cir.2004) (two-party requirement discussion for § 8(b))
- Santiago v. GMAC Mortgage Group, Inc., 417 F.3d 384 (3d Cir.2005) (anti-kickback interpretation context for § 8(b))
- Sosa v. Chase Manhattan Mortgage Corp., 348 F.3d 979 (11th Cir.2003) (fee-related interpretations under § 8(b))