ShareThis quarter, a number of RESPA cases again addressed claims based on captive reinsurance schemes and a kickback scheme involving referral fees between a title company and various financial institutions. In many of the cases discussed below, the claims were barred by the one-year statute of limitations.
A. Cases
RESPA claim alleging improper captive reinsurance scheme barred by the statute of limitations.
1. Menichino v. Citibank, N.A., No. 2:12-CV-58, 2018 WL 502728 (W.D. Pa. Jan. 19, 2018)
Borrowers claimed that the lender’s participation in a captive reinsurance scheme violated RESPA’s anti-kickback provision. Under the alleged scheme, the lender created a subsidiary company to serve as reinsurer. Borrowers were required to obtain mortgage insurance, and the lenders would refer homeowners to the insurers, who then gave a kickback to the reinsurers, which was owned by the lender. The borrowers allege this scheme was effectively a form of collusion in violation of RESPA.
The trial court noted that disclosures provided to the borrowers at the time of closing indicated that the reinsurance entity could be an affiliate of the lender. As such, the statute of limitations began to run at the time of closing, and equitable tolling did not apply. The court held that the claim was barred by the statute of limitations and entered judgment for the lender.
2. Dobbins v. Bank of America, N.A., No. RDB-17-0540, 2018 WL 620456 (D. Md. Jan. 30, 2018); Edmondson v. Eagle National Bank, No. RDB-16-3938, 2018 WL 582514 (D. Md. Jan. 29, 2018); James v. Acre Mortgage & Financial, Inc., No. RDB-17-1734, 2018 WL 638289 (D. Md. Jan. 31, 2018); Bezek v. First Mariner Bank, No. RDB-17-2902, 2018 WL 690840 (D. Md. Feb. 2, 2018)
RESPA claim dismissed because no extraordinary circumstances existed to toll the statute of limitations.
In these related cases, each of the plaintiff borrowers alleged that various financial institutions engaged in an improper kickback scheme with Genuine Title, LLC. The borrowers allege that the lenders received unearned fees from Genuine Title for referrals made to the title company. The financial institutions argued that the claims were barred by RESPA’s one-year statute of limitations, and moved to dismiss the claims.
In response, the borrowers asserted their claims were equitably tolled because they acted diligently to bring the claims, and the financial institutions concealed the kickback scheme. The court noted that borrowers’ counsel had already obtained significant awards against Genuine Title and other financial institutions, Genuine Title went bankrupt, and there was no allegation that the lenders continue to receive illegal kickback payments. Thus, the court found that no extraordinary circumstances existed to toll the statute of limitations and granted the lenders’ motions to dismiss.
3. Hutter v. Countrywide Bank, N.A., 710 Fed. Appx. 25 (2d Cir. Jan. 29, 2018)
Claim for alleged violation of anti-kickback provision failed because borrower admitted that broker performed services for the lender.
The borrower/homeowner alleged that the mortgage lender violated RESPA’s anti-kickback provision through improper payments made to the mortgage broker. RESPA’s anti-kickback provision does not apply where payments are made for “services actually performed.” Therefore, because the borrower admitted that the mortgage broker performed services for the lender, the trial court granted summary judgment for the lender. Summary judgment was affirmed on appeal.
B. Statutes and Regulations
No RESPA statutes or regulations were retrieved this quarter.
C. Volume of Materials Retrieved
RESPA issues were identified 10 times in 9 cases (see Tables 1, 2).
Table 1
Volume of Items Retrieved for First Quarter 2018
by Major Topic
|
Major Topic |
Cases |
Statutes |
Regulations |
|
Agency |
9 |
2 |
5 |
|
Property Condition Disclosure |
1 |
2 |
1 |
|
RESPA |
9 |
0 |
0 |
Table 2
Volume of Items Retrieved for First Quarter 2018 by Issue
|
Issue |
Cases |
Statutes |
Regulations |
|
Agency: Dual Agency |
2 |
0 |
0 |
|
Agency: Buyer Representation |
0 |
0 |
0 |
|
Agency: Designated Agency |
2 |
0 |
0 |
|
Agency: Transactional/Nonagency |
0 |
0 |
1 |
|
Agency: Subagency |
0 |
0 |
0 |
|
Agency: Disclosure of Confid. Info. |
0 |
0 |
0 |
|
Agency: Vicarious Liability |
0 |
0 |
0 |
|
Agency: Breach of Fiduciary Duty |
3 |
1 |
0 |
|
Agency: Disclosure of Financial Ability |
0 |
0 |
0 |
|
Agency: Agency Disclosure |
0 |
0 |
3 |
|
Agency: Minimum Service Agreements |
0 |
0 |
0 |
|
Agency: Pre-listing Marketing of Properties |
0 |
0 |
0 |
|
Agency: Teams |
0 |
1 |
1 |
|
Agency: Coming Soon Listings |
0 |
0 |
0 |
|
Agency: Other |
4 |
0 |
0 |
|
PCD: Structural Defects |
0 |
0 |
0 |
|
PCD: Sewer/Septic |
0 |
0 |
0 |
|
PCD: Radon |
0 |
0 |
0 |
|
PCD: Asbestos |
0 |
0 |
0 |
|
PCD: Lead-based Paint |
0 |
0 |
0 |
|
PCD: Mold and Water Intrusion |
0 |
0 |
0 |
|
PCD: Roof |
0 |
0 |
0 |
|
PCD: Synthetic Stucco |
0 |
0 |
0 |
|
PCD: Flooring/Walls |
0 |
0 |
0 |
|
PCD: Imported Drywall |
0 |
0 |
0 |
|
PCD: Plumbing |
0 |
0 |
0 |
|
PCD: HVAC |
0 |
0 |
0 |
|
PCD: Electrical System |
0 |
0 |
0 |
|
PCD: Valuation |
0 |
0 |
0 |
|
PCD: Short Sales |
0 |
0 |
0 |
|
PCD: REOs & Bank-owned Property |
0 |
0 |
0 |
|
PCD: Insects/Vermin |
0 |
0 |
0 |
|
PCD: Boundaries |
1 |
0 |
0 |
|
PCD: Zoning |
0 |
0 |
0 |
|
PCD: Off-site Adverse Conditions |
0 |
0 |
0 |
|
PCD: Meth Labs |
0 |
0 |
0 |
|
PCD: Stigmatized Property |
0 |
0 |
0 |
|
PCD: Megan’s Laws |
0 |
0 |
0 |
|
PCD: Underground Storage Tanks |
0 |
0 |
0 |
|
PCD: Electromagnetic Fields |
0 |
0 |
0 |
|
PCD: Pollution/Env’t’l Other |
0 |
0 |
0 |
|
Property Condition Disclosure: Other |
0 |
0 |
0 |
|
RESPA: Disclosure of Settlement Costs |
0 |
0 |
0 |
|
RESPA: Kickbacks |
7 |
0 |
0 |
|
RESPA: Affiliated Business Arrangements |
3 |
0 |
0 |
|
RESPA: Marketing Service Agreements |
0 |
0 |
0 |
|
RESPA: Other |
0 |
0 |
0 |