Riley comments on interpretation of unearned administrative fees

Riley comments on interpretation of unearned administrative fees

"Controversial Section 8(b) case gains steam in Ohio court", RESPA News Monthly

October 1, 2010

Francis X. Riley, III, a partner and vice chair of the Litigation Department, was quoted in this article in the October 2010 edition of RESPA News Monthlydiscussing a recent ruling by a federal judge in Ohio regarding RESPA Section 8(b), a matter that has several other circuit courts and district courts split on how it should be interpreted as it applies to unearned fees that are not split between two parties. In his ruling, the judge agreed with the Department of Housing and Urban Development’s (HUD) interpretation of RESPA Section 8(b) in ruling that the plaintiffs in a class action case could proceed with their claim that the defendant violated RESPA by charging an earned administrative fee.

Riley said, “The language is clear and unambiguous. It applies to the split of fees for settlement services rendered. Its focus was to prevent giving a portion of a settlement fee to another in return for a referral, because HUD wanted to induce settlement service providers to reduce their fees, which HUD believed they could when not being badgered for fees in return for referrals… Hopefully, the new Consumer Financial Protection Bureau will issue regulations, not just guidelines or interpretations that are helpful.”