The Lawletter Vol 37 No 1
Enacted in 1974, the Real Estate Settlement Procedures Act ("RESPA") regulates the market for real estate "settlement services," a term defined by statute to include "any service provided in connection with a real estate settlement." 12 U.S.C. § 2602(3) (Westlaw current through P.L. 112‑104 (excluding P.L. 112‑96 and 112‑102) approved 4‑2‑12). These services include, but are not limited to
title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement.
RESPA also provides in pertinent part 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." Id. § 2607(b). The Supreme Court recently held that this section does not prohibit a single settlement-service provider's retention of an unearned fee. Freeman v. Quicken Loans, Inc., No. 10-1042, 2012 WL 1868063 (U.S. May 24, 2012). Rather, in order to establish a violation of this RESPA section prohibiting the splitting of fees for which no services were provided in return, a consumer must demonstrate that a charge for settlement services was divided between two or more persons.
Writing for a unanimous Court, Justice Scalia agreed with the Fifth Circuit Court of Appeals that § 2607(b) covers only transactions in which a provider shares a part of a settlement‑service charge with one or more other persons who did nothing to earn that part. The Court stated:
In order to establish a violation of § 2607(b), a plaintiff must demonstrate that a charge for settlement services was divided between two or more persons. Because petitioners do not contend that respondent split the challenged charges with anyone else, summary judgment was properly granted in favor of respondent. We therefore affirm the judgment of the Court of Appeals.
Id. at *8.