High Court Will Weigh Discount Fees In Quicken Mortgage Case | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

    High Court Will Weigh Discount Fees In Quicken Mortgage Case

    The U.S. Supreme Court hears arguments Tuesday in a case testing whether it is illegal for mortgage lenders to tack on fees to closing costs for services that were not provided. The case was brought by three Louisiana couples who claim their lender violated a 1974 federal law aimed at preventing abusive practices in real estate closings.

    The borrowers sued their lender, Quicken Loans, contending that the company violated federal law by charging them as much as $5,000 for a "loan discount fee," a one-time fee normally charged in exchange for a lowered interest rate. That turned out to be something-for-nothing, the borrowers say, since they never got a lowered interest rate. Thus, they argue, Quicken violated the Real Estate Settlement Procedures Act, which bars lenders from collecting "unearned fees."

    Quicken has argued that the law was intended to stop abusive "backroom deals" and kickbacks that were prevalent in the mortgage industry, and that its fees are not covered by the law since they were not split with anyone else. The company has also denied that the fees were unearned, saying that they were "part of the pricing" for the loans.

    The families, backed by the Obama administration, counter that the law forbids both kickbacks and unearned fees, regardless of whether or not they are split. They note that the agency charged with administering the law, the Department of Housing and Urban development, has for nearly four decades been on record as interpreting the statute that way, and they point to pamphlets first issued by the agency in 1976 stating that it is illegal to "charge or accept a fee...where no service has actually been performed."

    In 2010 a federal appeals court in New Orleans rejected the agency's interpretation and ruled in favor of Quicken. The court said that the 1974 law only bars kickbacks and split fees for services not rendered, and that it doesn't apply to fees that are not split, even if they are unearned. The families appealed to the U.S. Supreme Court, which hears arguments today, with a decision expected by late June.

    Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

    NPR

    As Publishing Industry Courts China, Authors Speak Out Against Censorship

    Chinese writers and publishers are being celebrated this week at BookExpo America — the industry's largest trade event in North America. Free speech advocates are supporting silenced Chinese writers.
    NPR

    Cod Comeback: How The North Sea Fishery Bounced Back From The Brink

    A decade ago, fishermen trying to catch North Sea cod were coming up empty. Now, thanks to strict fishing rules put in place to halt the decline, this fish tale looks headed for a happy ending.
    WAMU 88.5

    D.C. Immigrants Remain In Shadows While Reform Hits Roadblock

    The administration's appeal to lift an injunction against his executive actions on immigration reform was denied. Consequently tens of thousands of undocumented immigrants in the metro D.C. area will continue to live in the shadows.
    NPR

    FCC Chairman Wants To Help Low Income Americans Afford Broadband

    Tom Wheeler proposes to reboot the Lifeline phone-access program. The plan recognizes that everyone needs to study, apply for jobs and make social connections online.

    Leave a Comment

    Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.