Saturday, June 02, 2012

Left Side of the Aisle #59 - Part 3

Outrage of the Week: SCOTUS sides with the corporations - again

On May 24, the Supreme Court issued its decision in Freeman v. Quicken Loans. I don't expect you heard about this case, but you should. It arose from a group of lawsuits out of Louisiana, combined into one, in which borrowers claimed that Quicken Loans violated the Real Estate Settlement Procedures Act, or RESPA, by charging them loan-discount fees on their mortgages without providing reduced interest rates in return - that is, the company charged them fees for services that were never rendered.

According to a unanimous decision of the Supreme Court, that's just fine. The law in question, they said, requires that these "unearned fees" be split with a third party, and since there was no third party, there was only Quicken Loans pocketing the cash for doing nothing, they were free to do so and jolly good for them. As a result of this decision, technically mortgage lenders can legally cheat homebuyers out of hundreds or even thousands of dollars by charging them fees and doing nothing in return. Put another way, SCOTUS has now found that by not specifically allowing for, not specifically banning, in the law a single-party rip-off, congress intended to allow your mortgage company to rip you off as long as they kept it all for themselves.

Circuit courts had been split on this question, which means at the very least that the requirement for a clear third party was debatable. But SCOTUS had no trouble, no difference of opinion, in coming down on the side of the corporations and against the individuals. Based on its record of the past couple of decades, including that being established by the "liberal" wing, that is no surprise - but it is still an outrage. The Supreme Court is again the Outrage of the Week.


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