Culpepper v. Irwin Mortgage

253 F.3d 1324 (11th Cir. 2001) ; Clearinghouse Number: 53892

Description

Eleventh Circuit Affirms Class Certification of Plaintiffs Who Obtained Federal Housing Administration Mortgage Loans with “Yield Spread Premiums” for Brokers

Abstract

The Eleventh Circuit affirmed the district court’s certification of the plaintiff class, persons who obtained Federal Housing Administration home mortgage loans for which defendant paid a “yield spread premium” to the mortgage broker. Defendant pays brokers a fee for referrals, known as a “yield spread premium,” for loans a broker originates at an interest rate above a “par rate.” The Real Estate Settlement Practices Act prohibits lenders from paying fees to mortgage brokers for referrals, unless those fees are compensation for the broker’s actual services in making the loan. A U.S. Department of Housing and Urban Development (HUD) regulation defines a legal yield spread premium as one where the payment is reasonably related to the value of the service the broker performs. Appealing the district court’s certification of the plaintiff class, defendant contended that the HUD test for legality of the yield spread premium must necessarily apply to each individual case because the broker’s services vary from loan to loan. The Eleventh Circuit rejected this argument; it found no evidence that defendant negotiated yield spread premiums with the brokers loan by loan but rather paid them in accordance with a formula common to all loans.

Additional Information

Attorney Information
Docket Date
2001-06-15 00:00:00+00:00

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