Alert March 25, 2008

Eleventh Circuit Joins Other Circuit Courts in Determining That RESPA Does Not Permit Excessive Fee Claims

The Eleventh Circuit joined the Second, Third, Fourth, Seventh and Eighth Circuits in concluding that Section 8(b) of the Real Estate Settlement Procedures Act cannot be used to challenge allegedly excessive settlement service charges where any service at all has been performed and there is no fee splitting or mark-up. Plaintiffs challenged the lender’s escrow waiver fee. The Court reversed a class certification decision, and ordered that the case be dismissed, for two reasons. First, the Court held that an earlier appellate panel’s finding that the lender had, in fact, provided some service in exchange for the fee was the law of the case, and thus the amended complaint alleging no services were provided could not stand. Second, the Court held that Section 8(b) does not apply to claims that a settlement fee is excessive in relation to the goods or services rendered. Because Section 8(b) “is not a price control provision,” the Court held that a claim is only stated if no services are rendered in exchange for the fee. Click here for a copy of Friedman v. Market Street Mortgage Corp., No. 05-13820 (11th Cir. March 20, 2008).