We posted earlier about the Supreme Court's recent ruling in Freeman v. Quicken Loans. The decision held that a plaintiff seeking to enforce the Real Estate Settlement Procedures Act's ban on unearned settlement charges must show that the charge was split between two or more people. This new Washington Post article says the Supreme Court's ruling is important. Here's an excerpt:
In a decision that could have significant effects on the fees that consumers pay in real estate transactions, the U.S. Supreme Court has ruled that “unearned” fees charged by lenders and other service providers do not violate federal law as long as they are not split with anyone else. The court’s unanimous decision effectively reopens the door to controversial “administrative” fees levied by real estate brokers, and could encourage the marking-up of fees by mortgage lenders, settlement agents and others, a practice that had been banned by federal regulators for the past decade. The ruling also represents a stinging defeat for the Obama administration’s departments of Justice and Housing and Urban Development — both of which had argued that charging unearned fees is illegal — and may be a shot across the bow of the new Consumer Financial Protection Bureau, which has inherited the task of policing mortgage and settlement abuses from HUD. The decision ... involved customers of Quicken Loans, the online mortgage company, who alleged that Quicken charged them “discount” fees but did not provide them lower interest rates on their mortgages, as is customary. Each “point” in a loan discount fee is equal to 1 percent of the mortgage amount. The failure to provide a lower rate, the plaintiffs claimed, meant that Quicken pocketed their fees without providing anything commensurate in return, which is a violation of the federal Real Estate Settlement Procedures Act.