Class Action Alleging RESPA Violations by Home Builder for Offering Discount on Closing Costs for use of Affiliated Lender Properly Dismissed because Mere Offering of such an Option does not Violate RESPA or HUD Regulations Eleventh Circuit Holds
Plaintiffs filed a putative class action against home builder D.R. Horton and its affiliated mortgage lender, DHI Mortgage, alleging violations of the federal Real Estate Settlement Procedures Act (RESPA). Yeatman v. D.R. Horton, Inc., 577 F.3d 1329, 1329 (11th Cir. 2009). According to the allegations underlying the class action complaint, plaintiffs agreed to purchase a home built by D.R. Horton and agreed to finance the home through its affiliate because the purchase agreement gave them “the option of receiving a discount on their closing costs on the house, provided they used DHIM as their mortgage lender.” Id., at 1329-30. The purchase agreement did not require plaintiffs to use DHIM as their lender, id., at 1330. Defense attorneys moved to dismiss the class action on the ground that the offer to discount closing costs if purchasers used an affiliate did not violate RESPA; the district court agreed, concluding that “the mere offering of an option of a discount on closing costs does not violate [RESPA],” and that it also did not violate the regulations promulgated by the Department of Housing and Urban Development (HUD) “prohibiting arrangements where consumers are required to use a specified service in order to buy another service or product.” Id. (citations omitted). Id., at 3-4. Accordingly, the district court granted defendants’ motion and dismissed the class action with prejudice. Id., at 1329. Plaintiffs appealed, and the Eleventh Circuit affirmed. The sum total of the Circuit Court’s analysis was, “We have considered the briefs and the well-reasoned opinion of the district court. We conclude that the district court properly dismissed [plaintiffs’] complaint with prejudice.” Id., at 1330. It therefore affirmed the dismissal of the class action, id.