No Injury in Fact, No Problem? SCOTUS Talks RESPA Rules Next Week - U.S. Supreme Court
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No Injury in Fact, No Problem? SCOTUS Talks RESPA Rules Next Week

In a past life, we worked in mortgage compliance. It was a dark time that we try to block from our memories. We mention this because it seems that mortgage law - specifically, the Real Estate Settlement Procedures Act or RESPA - is suddenly a hot topic.

When we left the mortgage world behind, we had a freedom party - as one does - and burned the RESPA rules in our fireplace. Even though our copy of RESPA is now a pile of ash, we remember the most basic tenet of the law: no kickbacks. The no-kickback rule forms the basis of the complaint in the first case of the Supreme Court's December sitting, First American Financial Corp. v. Edwards.

In the case, Cleveland homebuyer Denise Edwards alleges that her title insurance provider, First American Financial Corp, engaged in an illegal kickback scheme with her settlement agent, Tower City Title Agency, in exchange for Tower City's title insurance referrals. First American says that Edwards lacks standing because she didn't suffer an injury; all title insurance policies in Ohio cost the same amount at the time, reports The Plain Dealer.

The injury element - not the RESPA violation - has sparked interest in the case because First American is arguing that Edwards only has a statutory cause of action, not an injury in fact.

First American claims that "injury in fact is a hard floor of Article III standing that cannot be removed by statute," and that Congress's authorization of an award does not trump the standing requirement in the absence of injury in fact. From the looks of the amicus brief filings, businesses agree; injury in fact proponents ranging from Facebook to the Association of Global Automakers have filed amicus briefs on First American's behalf.

If the Supreme Court sides with First American, the decision will have much broader implications than just the "no kickbacks" RESPA rules. SCOTUSblog notes that approximately a dozen federal statutes provide a cause of action without a showing of injury in fact.

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