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Financial Services Law Insights and Observations

Court revives RESPA kickback suit

Courts Mortgages Kickback RESPA RICO


On January 26, the U.S. District Court for the District of Maryland granted plaintiffs’ motion for reconsideration and relief stemming from a 2020 dismissal order, which previously dismissed RESPA claims in a kickback suit. The case originally alleged a mortgage lender entered into an arrangement with a settlement service company to trade referrals for kickbacks, which resulted in the plaintiffs being overcharged for their settlement services. In 2020, the court granted the defendant’s motion to dismiss, finding that the alleged payments fell under RESPA’s safe harbor provision permitting compensation to be paid for services performed. In re-opening the case, the court acknowledged that the dismissal of the case was premised on two “clear” errors with respect to RESPA’s safe harbor provision. First, the court noted that it previously misconstrued that the settlement service company was the recipient of the alleged kickbacks, when in actuality, the lender received the kickbacks. Second, the court determined that the plaintiffs were correct in asserting that the court failed to consider allegations in their amended complaint that the lender did not render any services to the settlement service company to warrant the payments it received. The court concluded it had made an error by “concluding that the alleged kickback payments were protected under RESPA’s safe harbor provision.” The court also revived the plaintiffs’ Racketeer Influenced and Corrupt Organizations Act claims after determining they were plausibly pled.