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Court clarifies RESPA role on excessive fees
WASHINGTON (4/16/08)—The Eleventh Circuit Court of Appeals has ruled that the Real Estate Settlement Procedures Act” (RESPA’s) Section 8 (b) does not govern excessive fees because it is not a price control provision, according to the Credit Union National Association (CUNA). The relevant section bans fees “other than for services actually performed.” The ruling was in Friedman v. Market Street Mortgage Corp. Plaintiffs in the case had accused the defendant lender of charging a fee that was excessive in relation to services actually rendered. Plaintiffs argued their position was supported by a statement of policy issued by the Department of Housing and Urban Development (HUD) in 2001. But the court rejected the plaintiff’s argument and the HUD policy statement. It ruled that Section 8 (b) prohibits only charges for services that are not performed, and does not allow courts or others to divide permissible charges into what may deemed reasonable and unreasonable. The court cited previous cases, and the statutory language in RESPA. It said the law was clear and not ambiguous, and that it does not allow The Department of Housing and Urban Development to impose its own interpretation. The court also said the section was aimed at banning abusive practices, not as a means of creating broad price controls.


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