Supreme Court Says Discount Points Don't Equal Lower Rate

Wow, I don't want to get all giddy here, but this looks like some common sense! According to an article written by Brian Collins in National Mortgage News, the supreme court ruled in favor of Quicken loans regarding a suit where the borrowers say there was a RESPA violation.

The borrowers felt if they paid a discount point they should have received a lower rate for it. The lender says they did; they say they did not.

Who Cares? What I care about is by ruling in favor of the lender the Supreme Court is saying that federal regulators cannot use RESPA as a price-setting statute to deter lenders and other settlement service providers from charging excessive fees or even “unearned” or bogus fees for which no service is provided.

I love the wording "price-setting statute". Their interpretation is if the lender was "gouging" the borrower to make more money for themselves it is not as if the lender was "gouging" to split that fee with someone else or providing a kickback, which would be a RESPA violation,

The Real Estate Settlement Procedures Act of 1974 only prohibits fee-splitting between two parties and kickback schemes.

The ruling is not setting well at the CFPB, who are deeply involved in even more changes to the loan origination process. After the Federal Reserve changes to L O Comp last year managed to make the loan origination/closing process more confusing and costly to borrowers there seems to be no end in sight of institutions who work against the consumer.

Before the L O Comp rules I could collect part of my fee from the borrower and some from the lender. I could  give a borrower some of my commission to help them out. The good faith estimate and settlement sheet were easy to read. The CFPB is rumored to be working on a "flat fee" version of compensation.

The state where I'm licensed told me how much I could make on a loan prior to L O Comp. Lenders had their limits often less than this. I could price a loan based on how much work it took or give someone a break because I wanted to. This was not good enough, the Federal Reserve had to complicate an easy straight forward method.

Wouldn't it be nice if the Supreme Court could look at L O Comp and call it what it is - price fixing? Gosh, why stop there, wouldn't it be nice to put HVCC/AIR on trial?