The U.S. District Court for the Southern District of Alabama dismissed a lawsuit claiming that a lender violated Section 8(b) of the Real Estate Settlement Procedures Act by charging a loan discount fee and not discounting the interest rate charged. The Court in Wooten v. Quicken Home Loans held Section 8(b) cannot be applied to alleged “overcharges” without a mark-up of a third party charge or the splitting of fees. The Court also held the allegation that the lender charged a fee to discount the interest rate but did not provide a discounted rate was not actionable because interest rates charged in connection with loans are not “settlement services.” Goodwin Procter partner Tom Hefferon represented Quicken Home Loans. The Court distinguished this case from an identical one brought against another lender in the same court (Gunter v. Chase Bank) because the lender there did not argue that interest is not a “settlement service.” Click here for a copy of Wooten v. Quicken Loans, Inc., No. 07-00478 (S.D. Ala. March 10, 2008).
Alert March 25, 2008