The United States Supreme Court recently resolved an issue that had long divided lower courts concerning the scope of liability under Section 8(b) of the Real Estate Settlement Procedures Act (RESPA). At issue was whether a real estate settlement service provider must share an unearned fee with a third party before a Section 8(b) violation may be found. The circuit courts had been split as to whether a provider who retained 100 percent of a fee for services it did not perform violated Section 8(b).
Several courts, including the Second and Eleventh Circuit Courts of Appeal, had ruled that a provider violated Section 8(b) when it charged a fee for services that were not performed, regardless of whether it split the unearned fee with a third-party vendor. See Cohen v. J.P. Morgan Chase & Co., 458 F.3d 111 (2d Cir. 2007); Sosa v. Chase Manhattan Mortg. Corp., 348 F.3d 979 (11th Cir. 2003). In contrast, the Seventh and Eighth Circuit Courts of Appeal held that sharing fees with a third party was a necessary predicate to liability under Section 8(b). See Weizeorick v. ABN AMRO Mortg. Group, 337 F.3d 827 (7th Cir. 2003); Haug v. Bank of America, N.A., 317 F.3d 832 (8th Cir. 2003).
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