WASHINGTON — The U.S. Supreme Court on Thursday ruled Louisiana borrowers can't sue Detroit-based Quicken Loans Inc. on allegations the company charged them loan-discount fees but did not provide reduced interest rates in return.
Quicken Loans said the fees were legal and denied allegations that the fees were unearned.
At issue was how to interpret the Real Estate Settlement Procedures Act, a 1974 law that sought to address abuses in the mortgage industry by prohibiting kickbacks or referral fees in connection with the settlement process.
The plaintiffs argued the law was meant to forbid both kickbacks and unearned fees. The Obama administration supported that position, saying the U.S. Department of Housing and Urban Development has consistently interpreted the law to prohibit the charging of any unearned fees.
The Supreme Court, in a unanimous ruling by Justice Antonin Scalia, rejected those arguments.
The high court's decision affirmed a ruling by the New Orleans-based Fifth U.S. Circuit Court of Appeals, which had ruled for Quicken Loans, deciding the law did not impose a flat ban on unearned fees. The appeals courts said the law only prohibits lenders and other service providers from paying or receiving kickbacks.
