Real Estate Fees - Real estate fees May increase thanks to supreme court decision

Real Estate Fees May Increase Thanks to Supreme Court Decision The United States Supreme Court recently issued a decision concerning real estate fees that could affect home buyers significantly. This decision states that ‘unearned’ fees, charged by service providers and lenders, are legal in real estate transactions. These fees aren’t in violation of federal law as long as they are retained by the entity charging the fee and aren’t shared with others. The Supreme Court unanimously decided these fees, which are deemed administrative, can be charged. The concern of many though is that fees could be marked up by escrow officers, mortgage lenders and others. Federal regulators have banned the fees for the past ten years. The Department of Housing and Urban Development, along with the Justice Department, argued these fees were illegal. The court disagreed. Some believe the ruling may be directed toward the Consumer Financial Protection Bureau. This bureau is responsible for policing abuses on the part of HUD. The Supreme Court Decision The Supreme Court handed down their decision on May 24 after a suit was brought against Quicken Loans. Customers who made use of this lender claimed they were charged ‘discount’ fees. Once these fees were paid, they didn’t receive a low interest rate which is customary. In most cases, each point, or loan discount fee, is the equivalent of 1% of the total mortgage amount. Customers alleged that Quicken Loans pocketed this extra money and did not provide anything in return. They believed this to violate the federal Real Estate Settlement Procedures Act. Quicken Loans responded, saying this act did not apply as they were not sharing the fees with others. The borrowers disagreed, saying it did because they received no actual service or work for the money paid. As there have been many disputes over lending and real estate fees over the past few years, the Supreme Court felt the time had come to resolve the matter once and for all while also ensuring a uniform legal standard was put into place. State laws concerning these fees are not affected though. Another case involving fees involved a realty brokerage and the fees they imposed. They lost in federal court in Alabama in 2009. As a result, many companies now disclose these fees up front. This also played a role in the Supreme Court decision. Be aware though that many experts feel the Consumer Financial Protection Bureau may still go after companies they feel are charging consumers unfairly.