Civil Litigation

Settlement Service Provider Does Not Run Afoul of RESPA

The U.S. Supreme Court held last week that a settlement service provider does not run afoul of RESPA by retaining an unearned fee in connection with a transaction where it is the only settlement service provider. RESPA generally prohibits kickbacks and referral fees. A settlement service provider may only retain a fee for services actually performed. However, for the prohibitions in RESPA to kick in, there must be more than one settlement service provider who are sharing, or splitting, fees. “In our view, §2607(b) unambiguously covers only a settlement-service provider’s splitting of a fee with one or more other persons; it cannot be understood to reach a single provider’s retention of an unearned fee.” Freeman v. Quicken Loans, Inc., 2012 U.S. LEXIS 3940 (U.S. May 24, 2012).



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