Freeman v. Quicken Loans, Inc.

Background

Three married couples who obtained mortgage loans challenged fees charged by their lender, saying the lender collected fees without providing the promised services. The suits began in state court, were removed to federal court, and consolidated. The lender moved for summary judgment arguing the law at issue only bans fee-splitting with another person. The lower courts agreed, and the cases reached the Court for review.

Reasoning

The Court addressed whether the statute forbids a single provider from keeping an unearned fee, or instead covers only situations where a fee is divided and shared with another person who did not earn it. The Court examined the statutory text and concluded the words “give” and “accept” and the phrase “portion, split, or percentage” naturally describe one party giving part of a fee to another. The opinion explained that reading the law to cover an undivided fee would collapse two separate actions into one and could oddly treat consumers as lawbreakers. The Court also noted problems with treating the agency’s 2001 guidance as expanding the statute and avoided resolving any deference dispute because the text was plain.

Real world impact

The Court held that a consumer must show a settlement-service charge was split between two or more people to win under the statute. Because the borrowers here did not allege any sharing of the fees, summary judgment for the lender was affirmed. Consumers who face allegedly unearned fees from a single provider may need to rely on other legal claims or state law remedies.