U.S. Supreme Court

Supreme Court Rules Against Homeowners Who Sued Quicken Loans over Alleged Unearned Fees

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The U.S. Supreme Court has ruled for Quicken Loans in a suit filed by three couples who claim they were charged “unearned fees” at closing in violation of federal law.

In a unanimous opinion (PDF), the court ruled that the federal law bars unearned fees only when they are part of a fee-sharing arrangement. At issue was Section 2607(b) of the Real Estate Settlement Procedures Act, which provides that no one may accept “any portion, split, or percentage” of any closing charges “other than for services actually performed.”

Two of the couples claimed they were charged loan discount fees of around $1,000, but they did not get lower interest rates in return, according to the opinion by Justice Antonin Scalia. Another couple took issue with a $575 “loan processing fee” and a “loan origination” fee of more than $5,100.

The plaintiffs had argued that a ban on charging unearned fees was consistent with RESPA’s stated goal of protecting consumers from “from unnecessarily high settlement charges caused by certain abusive practices.” Scalia did not agree. “Vague notions of statutory purpose provide no warrant for expanding §2607(b)’s prohibition beyond the field to which it is unambiguously limited: the splitting of fees paid for settlement services,” he wrote.

Quicken has previously disputed the plaintiffs’ underlying allegations. “It is undisputed that the loan discount points collected in this case were earned and resulted in a lower interest rate for the borrowers,” Quicken said in a prior statement. “Any implication to the contrary is pure fantasy and has been manufactured by certain plaintiff law firms, attempting to twist and manipulate facts to serve their own financial interests.”

After the verdict was received, Quicken released a statement saying that they were pleased with the verdict. “Quicken Loans has won this case at every step and in every court–the U.S. District Court in New Orleans and the U.S. Court of Appeals for the Fifth Circuit–and now before the U.S. Supreme Court. Although we always believed that we were on the right side of the law, it is especially gratifying to have the affirmation of the highest court in the country.”

Prior coverage:

ABAJournal.com: “Supreme Court Accepts Case Challenging Mortgage Fees Charged by Quicken Loans”

Updated at 2:15 p.m. to include Quicken’s latest statement.

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