The Supreme Court ruled on Thursday that loan applicants cannot sue a mortgage company for charging them a loan discount fee without giving them a loan discount.
The unanimous ruling was a defeat for three couples in Louisiana, who claimed that Quicken Loans overcharged them as much as $1,100 at their mortgage closings for a "loan discount" or "processing" fee.
The Freeman family was said to have paid $980 while the Bennett family $1,100 in loan discount fees but allegedly did not get lower interest rates in return. Meanwhile, the Smith family allegations focus partly on a loan origination fee of $5,100, which they claim was a mislabeled loan discount fee.
The Detroit-based privately held company has denied charging unearned fees in the three residential mortgage loans in 2007, and has said it never will charge such fees.
A federal judge threw the lawsuit out, saying the Real Estate Settlement Procedures Act made the lawsuit improper.
That decision, which was upheld by the 5th U.S. Circuit Court of Appeals in New Orleans, was appealed to the Supreme Court.