The opinion of the court was delivered by: James B. Moran, United States District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Juan A. Doininguez, Noel Garcia, Maria J. Hernandez and Ana
K. Dominguez bring suit against defendants Alliance Mortgage Company
(Alliance) and Amerihome Mortgage Company, LLC (Amerihome), alleging that
defendants' fee structure violates the Real Estate Settlement Procedures
Act (RESPA), 12 U.S.C. § 2601 et seq. and its implementing
regulations, 24 C.F.R. § 3500.1 et seq. Plaintiffs also assert state
law claims against Amerihome for breach of fiduciary duty, against
Alliance for inducing Amerihome's breach, and against both defendants for
violations of the Illinois Consumer Fraud and Deceptive Business
Practices Act (ICFA), 815 ILCS 505/2. Defendants move for summary
judgment. For the following reasons, defendants' motion is granted.
When plaintiffs sought a mortgage, their real estate agent referred
them to Amerihome, a mortgage broker, who arranged for an FHA-backed loan
from Alliance. The total loan amount was $152,112.00. Plaintiffs paid
Amerihome a "loan origination fee" of $1,498.65 and a "loan discount" of
$380.28 in connection with the loan. Amerihome also received payment from
Alliance, in the form of a $1,901.40 "yield spread premium."
A yield spread premium (YSP) is a payment by a lender, such as
Alliance, to a mortgage broker, such as Amerihome, apart from any fees
paid by the borrower. The lender establishes a par interest rate, at which
it will make or purchase a loan from a class of borrowers, and informs
brokers of this rate by disseminating rate sheets to the brokers on a
regular basis. If the broker secures a borrower at a higher rate, the
lender pays a YSP linked to the increase in the rate. The formula for
computing the premium is included in the rate sheets.
We may only grant summary judgment when there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of
law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). We must
also draw all inferences and view all admissible evidence in the light
most favorable to plaintiffs. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986). This does not mean there must be absolutely no
evidence supporting the non-moving party, but, rather, there is not
enough to support a reasonable jury verdict. Id. at 248.
Plaintiffs advance two legal theories as to how defendants' practices
violate RESPA. First, they maintain that HUD regulations impose a hard
cap, 1% of the loan amount, on broker compensation, and that when
combined, the origination fee, discount fee and YSP exceed this cap. And
second, they assert that the yield spread premium is an illegal kickback
or referral fee.
HUD regulations limit the fees that mortgage brokers can charge
borrowers applying for FHA-insured loans:
203.27 Charges, fees or discounts.
(a) The mortgagee may collect from the mortgagor the
following charges, fees, or discounts:
(2) A charge to compensate the mortgagee for expenses
incurred in originating and closing the loan, ...