Supreme Court rejects CFPB’s amicus brief on RESPA

The U.S. Supreme Court unanimously rejected the CFPB’s amicus brief on Thursday urging the reversal of a court ruling that denies administrative agencies the right to bypass boundaries laid out by Congress regarding federal consumer protection statutes.

In the case, Freeman vs. Quicken Loans, the issue of debate was whether a provision of the Real Estate Settlement Procedures Act should be interpreted to require a split fee between two parties rather than allowing a single party to charge a fee. The court rejected the CFPB’s amicus brief argument and said that the agency tried to draw meaning from minor word choices in other sections of the legislation, according to the California Association of Mortgage Professionals.

Consumer advocates, class action attorneys and the U.S. Department of Housing and Urban Development have pushed for the use of RESPA’s anti-kickback provision to classify residential mortgage closing charges — or “junk fees” — as “unearned fees” regardless of whether the charges were split between two entities.

In its opinion, the court held that the fee should be shared between two parties and rejected HUD’s interpretation of the RESPA provision. The CFPB ultimately adopted HUD’s interpretation, and the court characterized the two federal agencies’ interpretation as “manifestly inconsistent with the statute” and a “palpable overreach.”

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