U.S. Supreme Court to rule on illegal mortgage fees
By agreeing to take on a lawsuit against Detroit-based Quicken Loans, the U.S. Supreme Court will rule on what constitutes illegal fees for mortgage lenders during the closing of a home sale, the Wall Street Journal said. It will clarify the interpretation of the 1974 Real Estate Settlement Procedures Act that prohibits mortgage lenders from receiving kickbacks or referral fees.
The Obama administration and the U.S. Department of Housing and Urban Development have interpreted the law as a clear order against lenders collecting unearned fees. But lower courts have ruled that the law doesn’t explicitly ban all unearned fees, rather it merely prohibits the payment or receipt of kickbacks.
The case in question is a lawsuit by a group of Louisiana borrowers against Quicken Loans, alleging the lender charged loan-discount fees but ultimately did not provide reduced interest rates. The case will go before the Supreme Court early next year. [WSJ]