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Haug v. Bank of America, NA

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On January 23, 2003, the 8th Circuit Court of Appeals rendered an opinion in a putative class action suit in which plaintiffs claimed that, "based on Defendant's nondisclosures, or false and misleading disclosures, they unknowingly paid charges for credit reports or other loan related services for federally related mortgage loans that exceeded Defendant's actual costs for those services." According to Plaintiffs, those charges violated RESPA and a Missouri state statute. The bank argued that the Section 8(b) of RESPA requires that one party must give and another party must receive an unearned portion, split, or percentage of a settlement service fee. The bank moved to dismiss the case on the grounds that Plaintiffs failed to state a RESPA claim because they did not allege a third party kickback or fee split with respect to the overcharges. The district court denied Defendant's motion to dismiss, citing a 2001 HUD Policy Statement which states that Section 8(b) proscribes all unearned portions or percentages of settlement fees as well as splits, meaning a single settlement service provider violates Section 8(b) whenever it receives an unearned fee.

On appeal to the 8th Circuit, however, the appellate court reversed the denial of the motion to dismiss. It said:
We therefore hold that Section 8(b) prohibits only transactions in which the defendant shares a “portion, split, or percentage of any charge” with a third party.
As for HUD's Policy Statement, and whether the district court should have considered it, the 8th Circuit Court said: "Because the language of Section 8(b) unambiguously requires the giving or receiving of an unearned portion of a settlement fee, the district court's inquiry should have ended with the plain language of the statute."


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