Eleventh Circuit Holds Settlement Service Fees Do Not Violate RESPA

RESPA

On March 2, the U.S. Court of Appeals for the Eleventh Circuit dismissed a homeowner’s claim that a title company violated RESPA fee-splitting bans during a refinanced mortgage closing by holding that if any real estate settlement service is rendered during a closing, fee charges for these services do not violate RESPA—regardless of whether such service is appropriate. A homeowner asserted that under state law, all real estate closing services are to be provided by a licensed attorney. Here, the title company performed all closing services and merely contracted with a law firm to provide an attorney to witness the closing, arguably not satisfying the law. The homeowner also claimed the title company unlawfully marked-up the recording fee and split it with the recording office. While holding that the homeowner satisfied standing requirements by alleging an unpaid refund as injury, the court declined to find that the title company violated RESPA. The court opined that even if it is illegal under state law to charge a settlement fee for services performed by a non-lawyer, services by both the title company and a law firm were performed nonetheless. Determining whether the fees were appropriate is not within the purview of the court or RESPA’s requirements. The marking-up of the recording fee also did not violate RESPA because both the title company and the recording office actually performed a service. The court subsequently dismissed the homeowner’s federal claims and remanded her state claims to the district court.