Opinion
98-CV-121 (JMR/FLN)
February 16, 2000
ORDER
The parties are before the Court on cross-motions for summary judgment. Each party presented oral argument on January 7, 2000. For the reasons set forth below, defendant's motion is granted, and plaintiffs' motion is denied.
I. Background
The facts underlying this case are set forth in some detail in this Court's Order, dated March 9, 1999. These facts are not further considered, except as necessary to resolve the matter.
Put briefly, defendant, Aegis Mortgage Corporation ("Aegis"), is a wholesale mortgage lender which financed a mortgage for plaintiffs, Stevan and Cherilyn Yasgigr ("the Yasgurs"), in March of 1997. The mortgage was arranged through North Suburban Mortgage, Inc., a retail mortgage broker. The HUD-1 Settlement Statement recites a payment of $465 by Aegis to North Suburban Mortgage for a "yield spread premium." The Yasgurs' complaint alleges this payment was an illegal kickback under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2607 (b). RESPA provides that "[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a settlement service involving a federally related mortgage loan other than for services actually performed."
II. Legal Context
As the Court noted in its ruling denying plaintiffs' motion for class certification, claims very similar to these have been prolific throughout the federal courts. See Order of March 9, 1999, at 10. The Court, at that time, knew of several such cases. It is now aware that dozens of cases have been filed around the country. The courts which have considered these cases have taken two basic approaches. The parties recognize that whichever approach this Court chooses, will control the outcome of this case.
The majority of the courts considering these cases have rejected similar claims. A number of these courts did so prior to March 1, 1999. This trend has continued, especially after that date, when the U.S. Department of Housing and Urban Development issued a policy statement on these issues. See Real Estate Settlement Procedures Act (RESPA) Statement of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers, 64 Fed. Reg. 10080 (1999) ("Policy Statement"). See, e.g., Schmitz v. Aegis Mortg. Corp., 48 F. Supp.2d 877, 882-83 (D. Minn. 1999) (Doty, J.). A few courts have ruled to the contrary. See, e.g., Culpepper v. Inland Mortgage Corp., 132 F.3d 692 (11th Cir. 1998),
The Court, having reviewed the record and submissions herein and the relevant case law, concludes that the majority of courts are correct. In this regard, this Court fully adopts and adheres to the views and reasoning of its colleague, the Honorable David 2. Doty, in his Order issued in In re Old Kent Mortgage Company Yield Spread Premium Litigation, Civ. No. 98-MD-124G (DSD/JMN). short, the Court opts for the "functional reasonableness" analysis. In doing so, the Court rejects the less persuasive Culpepper approach.
The Court sees no need to set out a lengthy explication of These views and the reason for its selection. Further, the Court is well aware this case, and the others to which it is similar, will be decided in the Eighth Circuit Court of Appeals and, perhaps, in other venues. Under these circumstances, the Court is confident that its own further rhetoric will add little to the discussion.
Having reached these conclusions, the Court finds the Yasgurs have failed to show that the total compensation was unreasonable in relation to the goods, facilities, and services actually provided. See Policy Statement at 10085 (listing valid loan origination services). Because there is no genuine issue of material fact under the legal approach chosen by the Court, summary judgment is therefore appropriate.
Beyond their RESPA claims, plaintiffs reference state deceptive trade practices statutes. Their complaint, however, disclosed only a claim based on Texas law. Because their motion for class certification was denied, and because the Yasgurs, themselves, have no standing to assert Texas claims, those claims must fail. The complaint does not assert claims based on any other state law, including Minnesota's.
III. Conclusion
Accordingly, IT IS ORDERED that:
1. Defendant's motion for summary judgment [Docket No. 64] is granted.
2. Plaintiffs' motion for summary judgment [Docket No. 68] is denied.
LET JUDGMENT BE ENTERED ACCORDINGLY.