The Supreme Court’s rulings have a habit of disappearing in the daily news cycle, but its most recent ruling could have a transformative effect on the entire real estate landscap.
The ruling for Freeman et. al. v. Quicken Loans, deserves some examination – there are four things you must know about it.
First, some backstory: Brought by a number of homeowners against Quicken Loans, the lawsuit alleged that the lender charged unearned fees for work it did not provide. But the Court ruled in unanimous favor of Quicken Loans and stated that such fees, whether charged by lenders or other service providers in real estate, do not violate federal law if they are not divided with other interested parties. With that said, here are the four things agents should be aware of:
- “Marking up” and “administrative” fees have been banned by federal regulators for the past decade, and both the Obama White House and HUD had argued they were illegal – yet, the Court’s ruling, in defiance of those precedents, re-opens the door for such compensation methods.
- One example was a federal case involving RealtySouth, a Birmingham, Ala.-based brokerage and HomeServices subsidiary, and a $149 fee it attached to transactions. The lower court ruled against RealtySouth and deemed the fee illegal, but that case has now been reversed by the court.
- The National Association of Realtors backed Quicken throughout the lawsuit, even filing an amicus brief with the Court supporting the lender’s argument. Laurie Janik, NAR’s general counsel, said in a Kenneth R. Harney column on the case that brokers “ought to be able to charge what they need to make a profit.”
- We’re still not out of the woods, though, when it comes to debates on real estate fees. The Court’s argument involved RESPA, but the Consumer Financial Protection Bureau is endowed with its own, independent powers to condemn what it sees as unfair business practices.
So what do you see happening? Will fees become more commonplace, or is this just legal mumbo jumbo that won’t really influence how real estate operates?