Resolving The Split On Split Fees Under RESPA: Freeman v. Quicken Loans Holds That Fee-Splitting Is Prohibited Only If The Fee Actually Is Split

On May 24, 2012, the Supreme Court of the United States issued a unanimous decision in Freeman v. Quicken Loans, Inc., No. 10-1042, 566 U.S. __ (2012), resolving a split between the Second and Fifth Circuits as to whether Section 8(b) of the Real Estate Settlement Procedures Act ("RESPA") prohibits a settlement-service provider from charging a borrower an "unearned" fee, i.e., a fee for which the settlement-service provider in fact provides no service to the borrower. The court held that such unearned fees are not prohibited by the statute; rather, Section 8(b) is violated only where a provider splits a portion of a settlementservice fee with one or more third parties.

Section 8(b) of RESPA states that "[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service ... other than for services actually performed." RESPA § 8(b), codified at 12 U.S.C. § 2607(b).