first tuesday case in point: RESPA “no-new-service, no-second-fee” rule applies only to fee splitting

This case in point discusses RESPA’s application to fee-splitting and unearned fees, as viewed through the recent case decision, Freeman v. Quicken Loans.

Facts: A homebuyer applied to a lender for a purchase assist mortgage. During negotiations, the homebuyer agreed to pay the lender additional “loan discount fees” to buy down the interest rate on the loan from the par rateThe interest rate without the addition of a yield spread premium or discount points.. However, at closing the homebuyer did not receive a commensurate interest rate reduction in exchange for those fees. The loan discount fees were retained in their entirety by the lender, not being split with a third-party service provider.