Freeman v. Quicken Loans, Inc. (10-1042)

argument 10-1042

Freeman v. Quicken Loans, Inc.

Supreme Court of the United States 1h 1m 4 speakers 8 chapters transcribed 5 days ago official recording ↗

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What is the central legal issue presented in Freeman v. Quicken Loans?

John G. Roberts 0:01

We'll hear argument first this morning in case ten ten four two, Freeman versus Quicken Loans. Mr Russell?

Mr. Russell 0:08

Mr. Chief Justice, I may please the Court. For decades the agency Congress charged with administering the Real Estate Settlement Procedures Act has construed that statute as prohibiting a lender from accepting a charge for a real estate settlement service it didn't provide, whether it accepts that charge directly from a consumer or indirectly through another service provider, and whether it shares that fee with another provider or keeps it all for itself. That interpretation is eminently reasonable and is entitled to deference.

Unknown 0:39

Am I right in thinking that HUD and his successor they don't Have any suit. um commencement authority.

Mr. Russell 0:49

HUD does have authority to bring suits for injunctive relief for violations of twenty six oh seven B. And

Unknown 0:57

For injunctive relief.

Mr. Russell 0:58

For injunctive relief, that's correct. And that agency has long construed the language of this provision as as reaching all unarned fees, whether divided or not. And that interpretation of the language we think is eminently useful. As reaching all Something fees whether provided. All unearned fees without

Stephen G. Breyer 1:18

whether split or not. And proud is this just maybe a side issue. But I don't see how this is a fee for service. I mean I thought points is simply a way of paying more money up front and getting a lower interest rate later. It isn't supposed to be for any service. It's simply a question of a of a loan term, how much you borrow what the interest rate is.

Mr. Russell 1:37

Well, you're right. I I do think it's a side issue because the the courts of below didn't decide that in quicker.

Stephen G. Breyer 1:42

What are we supposed to do? Decide theoretically in the context of a case that does not involve Paying a fee for a service that doesn't exist, whether you can pay for a service that doesn't exist.

Mr. Russell 1:53

I think you can take it on the same assumption that the Court of Appeals did that the fee was unearned and decided. the question presented. But to answer your question, uh it Congress amended the statute specifically to overrule the Sixth Circuits decision in Graham, which held that loan discount fees were not covered by the statute in that case involving a kickback. I know Quicken argues that that case involved origination fees. We don't think that's correct. But this is this is an issue you could have an entire case about. What's the

Stephen G. Breyer 2:20

what's the argument on the other side? A point? is a way of paying more money, i. e. borrowing less Since you pay more, that means you borrow less. And so your interest rate is lower. Because you've borrowed less. Now, what's the argument on the other side?

Mr. Russell 2:38

The argument is Congress ad specifically defined the term real estate settlement service to include the origination of loan, which includes but is not limited to the funding of the loan. And it did that in order to encompass kickbacks at the very least involving loan discount points, which is what is at issue. in gram. Now you can have debates, and we will have in this case eventually, debates about what does it mean for a a loan discount fee to be unearned. But for present purposes, the the circuit split arose here in the much more common circumstance when there are unearned fees for appraisals and courier fees, uh and and that's what the lower court decided on the basis of. And it did so I suppose if if

Unknown 3:22

The lower court could have been wrong for either one of two reasons. Uh We don't have to decide which of the two. We w were precluded from

Mr. Russell 3:35

No, I don't think you're precluded from considering. I I mean it's i

Unknown 3:38

it would be just as well to say that uh Uh the question presented here decides the case, as it would be to say that the question uh raised by Justice Breyer decides the case, right?

Mr. Russell 3:50

Right. I And is there any reason to put the one before the other? There are several reasons. One is the lower courts did not address this question. Quicken hasn't briefed it to any extent. Quicken doesn't ask you to decide it on the base of that question. We haven't briefed it. It's a complicated question that involves interpretation of another provision of the statute that Congress amended to deal specifically with this problem.