Loan Processing Fees Do Not Violate RESPA

In a case that made it all the way to the U.S. Supreme Court, plaintiffs alleged that their lender, Quicken Loans, violated the Real Estate Settlement Procedures Act (RESPA) by charging loan processing and loan discount fees.  The plaintiffs claimed that the fees Quicken charged them were not tied to specific services, nor did they lead to a reduction in the plaintiffs’ loan costs.  Therefore, the plaintiffs alleged that the loan processing and discount fees violated Section 8(b) of RESPA, which prohibits unearned fees.

The Supreme Court, however, sided with Quicken Loans, affirming the defendant’s argument that Section 8(b) of RESPA applies only to fees that are split with another settlement service provider.  Since the fees in question were not split with any other party, and since the plaintiffs had never alleged that the fees were split with another party, the case was decided in Quicken Loans favor.