252fmortgage Rate Mortagagemortgagelender Register Php Mortgage Mortgage Lender 132 F3d 692 Culpepper v. Inland Mortgage Corporation | OpenJurist

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Based on the undisputed evidence, the only "service" for which the yield spread premium was compensation was Premiere's "service" of referring an above par loan to Inland. However, referring loan business, even valuable business, is not a service for which RESPA permits payment. The yield spread premium payment thus violated RESPA.

F. RESPA's Market Value Test Is Inapplicable

RESPA's implementing regulations provide a test to determine whether a payment for a good or service is so excessive that part of the payment actually may constitute a prohibited referral fee.6 Citing this test, the district court found that the payment Inland made to Premiere was a fair market price for the Culpeppers' loan and thus concluded that there was "no 'excess' payment left to be attributed to a 'referral fee.' " Culpepper v. Inland Mort. Corp., 953 F.Supp. 367, 372 (N.D.Ala.1997). This conclusion ignores the fact that the payment did not compensate Inland for any good or service. The market value test is useful only if the payment is for a good or service in the first instance and a determination must be made whether the payment is so excessive that the excess should be characterized as a referral fee. Here, Inland paid Premiere only for the referral of the loan. Thus, the market value test is inapplicable.

Inland stresses that market forces drive the size of yield spread premiums. This fact does not affect our analysis because the size of kickbacks and referral fees often is shaped by the value of the referred business. A market driven referral fee is still a referral fee prohibited by RESPA.

Pursuant to Inland's request, the district court delayed consideration of the class certification issue until after resolving the motion for summary judgment. Having granted summary judgment in Inland's favor, the district court dismissed the class allegations without prejudice and denied the Culpeppers' motion for class certification without reaching the merits under Federal Rule of Civil Procedure 23. In light of our above reversal, we vacate the district court's denial of the motion for class certification and dismissal of the class claims and remand so that the district court can consider these issues ab initio.

Under the particular facts here, the yield spread premium Inland paid to Premiere was a prohibited referral fee under RESPA. Therefore, we REVERSE the district court's grant of summary judgment for Inland and REMAND for further proceedings consistent with this opinion. We also VACATE the district court's dismissal of the class claims and denial of class certification and REMAND for consideration under Rule 23.