Tyna L. Boulware, on behalf of herself and all others similarly situated v.  Crossland Mortgage Corporation

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 TYNA L. BOULWARE, on behalf of
herself and all others similarly
situated,
Plaintiff-Appellant,
v. No. 01-2318 
CROSSLAND MORTGAGE CORPORATION,
Defendant-Appellee,
UNITED STATES OF AMERICA,
Amicus Curiae. 
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Frederic N. Smalkin, Chief District Judge.
(CA-01-2114-S)
Argued: April 4, 2002
Decided: May 22, 2002
Before WILKINSON, Chief Judge, and WILLIAMS and
TRAXLER, Circuit Judges.
Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Williams and Judge Traxler joined.
COUNSEL
ARGUED: James Evan Felman, KYNES, MARKMAN & FEL-
MAN, P.A., Tampa, Florida, for Appellant. Christine N. Kohl, Appel-

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late Staff, Civil Division, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Amicus Curiae. Michael Schatzow,
VENABLE, BAETJER & HOWARD, L.L.P., Baltimore, Maryland,
for Appellee. ON BRIEF: Katherine Earle Yanes, KYNES, MARK-
MAN & FELMAN, P.A., Tampa, Florida; Andrew N. Friedman,
Gary E. Mason, Victoria S. Nugent, COHEN, MILSTEIN, HAUS-
FELD & TOLL, Washington, D.C.; Lee S. Shalov, SHALOV,
STONE & BONNER, New York, New York; Peter D. Fastow, Steven
B. Preller, TROESE, FASTOW & PRELLER, L.L.C., Annapolis,
Maryland, for Appellant. Robert D. McCallum, Jr., Assistant Attorney
General, Thomas M. DiBiagio, United States Attorney, Michel Jay
Singer, Appellate Staff, Civil Division, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C.; Richard A. Hauser, General
Counsel, Peter S. Race, Assistant General Counsel, Joan L. Kayagil,
UNITED STATES DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT, Washington, D.C., for Amicus Curiae. Mark D.
Maneche, VENABLE, BAETJER & HOWARD, L.L.P., Baltimore,
Maryland, for Appellee.
OPINION
WILKINSON, Chief Judge:
Plaintiff Tyna Boulware claims that § 8(b) of the Real Estate Set-
tlement Procedures Act ("RESPA") is a broad price control statute
prohibiting any overcharge for real estate settlement services. Boul-
ware seeks to certify a class to challenge Crossland Mortgage Corpo-
ration’s alleged overcharge for credit reports. The district court found
that Boulware did not allege any split or kickback of the overcharge
from Crossland to a third party. It thus dismissed Boulware’s com-
plaint and denied class certification. We agree with the Seventh Cir-
cuit that § 8(b) is a prohibition on kickbacks rather than a broad price
control provision. See Echevarria v. Chi. Title & Trust Co., 256 F.3d
623 (7th Cir. 2001); Durr v. Intercounty Title Co., 14 F.3d 1183 (7th
Cir. 1994). We therefore affirm the judgment.
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I.
In November 2000, Tyna Boulware, a Maryland consumer,
obtained a federally related home mortgage loan from Crossland
Mortgage Corporation.1 In connection with this loan, Crossland pur-
chased Boulware’s credit report from a third-party credit reporting
agency. On July 18, 2001, Boulware initiated this action, alleging that
Crossland violated RESPA § 8(b), 12 U.S.C. § 2607(b) (2000), by
charging her $65 for the credit report when it cost Crossland $15 or
less to obtain it. Boulware claimed that Crossland kept the $50 over-
charge for itself without performing additional services. She did not
allege that the credit reporting agency or any other third party
received payment from Crossland beyond that owed to it for services
actually performed.2
Boulware sought civil remedies under RESPA, including treble
damages, attorneys’ fees, and costs. See 12 U.S.C. § 2607(d). In addi-
tion, she sought to certify a class of all parties who had received simi-
lar mortgages from Crossland in the past twelve months, and who had
paid Crossland for a credit report in connection with their loans.
On October 2, 2001, the district court dismissed Boulware’s com-
plaint and denied class certification. Following two Seventh Circuit
decisions, the district court held that the "plain words" of RESPA
§ 8(b) "support the proposition that the statute is only violated where
there is a charge for a real estate settlement service that is split or
kicked back, not simply where there has been an overcharge." See
Echevarria, 256 F.3d 623; Durr, 14 F.3d 1183. The district court rec-
ognized that the Department of Housing and Urban Development was
authorized to promulgate regulations and interpretations of RESPA,
see 12 U.S.C. § 2617, and intimated that HUD’s view of the statute
was consistent with Boulware’s. However, the court refused to adopt
a construction of the statute that went beyond § 8(b)’s plain meaning,
1On January 2, 2001, Crossland merged into Wells Fargo Home Mort-
gage, Inc. However, we follow the practice of the district court and par-
ties by referring to the defendant as Crossland.
2Because the district court dismissed Boulware’s complaint under Fed.
R. Civ. P. 12(b)(6), we accept her allegations as true. See, e.g., Mayes
v. Rapoport, 198 F.3d 457, 460 (4th Cir. 1999).
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"whether condoned by administrative agency utterances or not." Boul-
ware appeals.
II.
A.
RESPA § 8(b) provides:
No person shall give and no person shall accept any por-
tion, split, or percentage of any charge made or received for
the rendering of a real estate settlement service in connec-
tion with a transaction involving a federally related mort-
gage loan other than for services actually performed.
12 U.S.C. § 2607(b). The plain language of § 8(b) makes clear that it
does not apply to every overcharge for a real estate settlement service
and that § 8(b) is not a broad price-control provision. Therefore,
§ 8(b) only prohibits overcharges when a "portion" or "percentage" of
the overcharge is kicked back to or "split" with a third party. Compen-
sating a third party for services actually performed, without giving the
third party a "portion, split, or percentage" of the overcharge, does not
violate § 8(b). By using the language "portion, split, or percentage,"
Congress was clearly aiming at a sharing arrangement rather than a
unilateral overcharge.3
Here, Crossland collected an overcharge and kept it as a "windfall"
for itself. See Durr, 14 F.3d at 1187. We therefore reject Boulware’s
argument that § 8(b) applies, and conclude that the district court cor-
rectly dismissed her complaint under Rule 12(b)(6).
This very case demonstrates the problems with concluding other-
wise. As previously noted, Boulware does not allege that Crossland’s
purported overcharge was kicked back to or split with the credit
3An overcharge or unearned fee must be present in order for § 8(b) to
apply because the charge must be one "other than for services actually
performed." However, the presence of an overcharge alone, without any
portion of the overcharge being kicked back to or split with a third party,
is not sufficient to fall within the purview of § 8(b).
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reporting agency or any other third party. Outside of a kickback or
fee-splitting situation, there is no way to make sense of the statutory
directive that "[n]o person shall give and no person shall accept" any
portion of an unearned fee. In fact, under Boulware’s view, Boulware
herself would have to be the giver contemplated by the statute in
order for § 8(b) to apply.
It would be irrational to conclude that Congress intended consum-
ers to be potentially liable under RESPA for paying unearned fees. In
addition to civil penalties, RESPA § 8(d) establishes criminal sanc-
tions for violations, including up to one year in prison. And it makes
both the giver and the acceptor jointly and severally liable. See 12
U.S.C. § 2607(d)(1)-(2). It would be perverse to find that Congress
intended to impose such liability on consumers — the very group it
was trying to protect in enacting RESPA. See 12 U.S.C. § 2601.
Accordingly, the giver in § 8(b) must be some party in the settlement
process besides the borrower herself.
Boulware, joined by HUD as amicus curiae, contended at oral
argument that the government would not prosecute consumers. How-
ever, it is unclear whether the government would be bound by HUD’s
statement that it is "unlikely to direct any enforcement actions against
consumers for the payment of unearned fees." RESPA Statement of
Policy 2001-1, 66 Fed. Reg. 53,052, 53,059 n.6 (October 18, 2001).
Moreover, it is insufficient for HUD to proclaim that the statute will
not be enforced against consumers. We cannot interpret § 8(b) so as
to compel the absurd conclusion that Congress drafted it to apply to
consumers in the first place. See, e.g., United States v. Wilson, 503
U.S. 329, 334 (1992) (citing United States v. Turkette, 452 U.S. 576,
580 (1981)).
Boulware cannot give a satisfactory explanation of what the phrase
"[n]o person shall give and no person shall accept" means under her
interpretation of the statute. She attempts to avoid the problem posed
by the prospect of applying § 8(b) to consumers by asserting that a
giver and acceptor do not both have to be present for the statute to
apply. Alternatively she claims that § 8(b) only applies if the giver
knows that services were not rendered. But Boulware’s arguments are
unpersuasive because these qualifications find no expression in the
plain language of the statute. The use of the conjunctive "and" indi-
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cates that Congress was clearly aiming at an exchange or transaction,
not a unilateral act.
Our interpretation of § 8(b) makes sense of all of the statute’s terms
and leaves a wide variety of conduct prohibited. For example, the pro-
vision would clearly apply to situations where a mortgage lender
overcharges a consumer and splits the overcharge with a mortgage
service provider, such as a credit reporting agency. In such a case,
both the lender/giver and the credit-reporting agency/acceptor would
violate § 8(b). In addition, the statute would apply if a mortgage ser-
vice provider overcharged for its services and gave a mortgage lender
a portion of the unearned fee.
In holding that § 8(b) requires fee-splitting or a kickback, our result
is consistent with the only other federal appellate court that has
addressed the question of whether § 8(b) requires unearned fees to
pass from one settlement service provider to another. See Echevarria,
256 F.3d 623; Durr, 14 F.3d 1183; Mercado v. Calumet Fed. Sav. &
Loan Ass’n, 763 F.2d 269 (7th Cir. 1985). The Seventh Circuit has
held on three occasions that § 8(b) does not apply to all overcharges
for real estate settlement services. Instead, the court explained that
§ 8(b) "is an anti-kickback statute" which "requires at least two par-
ties to share fees." Mercado, 763 F.2d at 270. And the court stressed
that "under RESPA’s express terms," the broad protection of the stat-
ute "extends only over transactions where the defendant gave or
received any portion, split, or percentage of any charge to a third
party." Durr, 14 F.3d at 1187 (internal quotation omitted). Further-
more, in both Echevarria and Durr, the Seventh Circuit confronted
facts almost identical to those in the case at bar and found no viola-
tion of § 8(b) in the absence of any allegation of a kickback to a third
party. Echevarria, 256 F.3d at 626-27; Durr, 14 F.3d at 1186-87.
Boulware contends that our interpretation of § 8(b) is incorrect
because it makes § 8(a) and § 8(b) both proscribe the same conduct.
However, a comparison of these two subsections does not affect our
conclusion. Section 8(a) states:
No person shall give and no person shall accept any fee,
kickback, or thing of value pursuant to any agreement or
understanding, oral or otherwise, that business incident to or
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a part of a real estate settlement service involving a federally
related mortgage loan shall be referred to any person.
12 U.S.C. § 2607(a). It is apparent that § 8(a) is not rendered mean-
ingless by our interpretation of § 8(b). The provisions both seek to
eliminate kickbacks or referral fees paid to a third party, but they do
so by prohibiting different actions. Section 8(a) prohibits the payment
of formal kickbacks or fees for the referral of business and does not
require an overcharge to a consumer. On the other hand, § 8(b) pro-
hibits "splitting fees with anyone for anything other than services
actually performed." Willis v. Quality Mortgage USA, Inc., 5 F. Supp.
2d 1306, 1308 (M.D. Ala. 1998) (noting the differences between
§ 8(a) and (b)). Section 8(b) therefore requires an overcharge and pro-
hibits conduct where money is moving in the same way as a kickback
or referral fee even though there is no explicit referral agreement.
B.
In a further attempt to salvage her claim, Boulware urges us to pro-
ceed past the language of § 8(b) to HUD’s broader interpretation of
the provision. See 24 C.F.R. § 3500.14(c) (2001) ("Regulation X"); 66
Fed. Reg. at 53,057-59. Deference might well be due Regulation X
or HUD’s statement of policy if § 8(b) were ambiguous. See Chevron
U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43
(1984). But the text of the statute controls in this case. Id.; see also,
e.g., Hillman v. IRS, 263 F.3d 338, 342 (4th Cir. 2001) (citing Cami-
netti v. United States, 242 U.S. 470, 485 (1917)). Although it is true
that "RESPA is a broad statute, directed against many things that
increase the cost of real estate transactions," it is equally true that "the
objective of a statute is not a warrant to disregard the terms of the
statute." Mercado, 763 F.2d at 271.
III.
Despite the textual directive of § 8(b), Boulware argues that Con-
gress’ intent in enacting § 8(b) was far broader than our reading of it,
and that her claim should accordingly not be dismissed. She maintains
that Congress intended to forbid all overcharges and markups by
mortgage lenders for every real estate settlement service they might
provide. Boulware is in effect asking us to subject all settlement ser-
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vices, including, inter alia, title searches, title examinations, title
insurance, attorneys’ services, property surveys, credit reports, pest
inspections, real estate agents’ and brokers’ services, and loan pro-
cessing, to broad price regulation. In fact, under her interpretation of
the statute, HUD or the federal courts could determine what settle-
ment service fees are reasonable in the first instance, without an alle-
gation that the fees were even marked up. See 66 Fed. Reg. at 53,059
(stating that under HUD’s interpretation of § 8(b), which mirrors
Boulware’s, "[a] single service provider also may be liable under
§ 8(b) when it charges a fee that exceeds the reasonable value of
goods, facilities, or services provided"). Further, Boulware would
provide both a private right of action and potential criminal penalties
to enforce the price controls she envisions § 8(b) creating. See 12
U.S.C. § 2607(d).
If Congress had intended § 8(b) to sweep as broadly as Boulware
proposes, it could easily have written § 8(b) to state that "there shall
be no markups or overcharges for real estate settlement services." Or
Congress could have explained that "a mortgage lender shall only
charge the consumer what is paid to a third party for a real estate set-
tlement service." But Congress chose not to draft the statute that way.
And we have no authority to recast it. If we were to read § 8(b) in the
way Boulware suggests, every settlement fee would be the subject of
potential litigation and discovery, leading perhaps to increased costs
for real estate settlement services in the long run. Though the regula-
tion of charging practices would not be beyond the purview of Con-
gress, this was not Congress’ intent in enacting RESPA.
Instead, the view that § 8(b) only applies when there is a kickback
or split with a third party is actually the view that is consistent with
RESPA’s stated purposes. In enacting RESPA, Congress proclaimed
that "significant reforms in the real estate settlement process" were
needed to protect consumers "from unnecessarily high settlement
charges caused by certain abusive practices that ha[d] developed in
some areas of the country." 12 U.S.C. § 2601(a). Congress went on
to explain that one of the purposes of RESPA was "to effect certain
changes in the settlement process," which would result "in the elimi-
nation of kickbacks or referral fees that tend to increase unnecessarily
the costs of certain settlement services." 12 U.S.C. § 2601(b)(2).
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Nothing in § 2601 indicates that RESPA § 8 was intended to elimi-
nate all settlement service overcharges. Instead, its purpose was "to
prohibit all kickback and referral fee arrangements whereby any pay-
ment is made or thing of value furnished for the referral of real estate
settlement business." Mercado, 763 F.2d at 270-71 (quoting Senate
report). And the provision was designed to prohibit "a person that ren-
ders a settlement service from giving or rebating any portion of the
charge to any other person except in return for services actually per-
formed." Id. at 271 (quoting Senate report); see also Echevarria, 256
F.3d at 627; Durr, 14 F.3d at 1186; Duggan v. Indep. Mortgage
Corp., 670 F. Supp. 652, 654 (E.D. Va. 1987). Therefore, if we sub-
jected a settlement service provider to RESPA liability for keeping an
overcharge without requiring an allegation that the unearned fee was
shared with a third party, "we would radically, and wrongly, expand
the class of cases to which RESPA § 8(b) applies." Echevarria, 256
F.3d at 627.4
IV.
RESPA was meant to address certain practices, not enact broad
price controls. Congress chose to leave markups and the price of real
estate settlement services to the free market by "consider[ing] and
explicitly reject[ing] a system of price control for fees." Mercado, 763
F.2d at 271 (citing Senate report). Instead, Congress "directed § 8
against a particular kind of abuse that it believed interfered with the
operation of free markets — the splitting and kicking back of fees to
parties who did nothing in return for the portions they received." Id.
Accordingly, we decline to extend § 8(b) beyond its text, and we
affirm the judgment.
AFFIRMED
4In deciding whether to certify a class, a district court has "broad dis-
cretion" within the framework of Fed. R. Civ. P. 23. Lienhart v. Dryvit
Sys., Inc., 255 F.3d 138, 146 (4th Cir. 2001). Because Boulware failed
to state a claim as the purported named plaintiff, and because all other
similarly situated plaintiffs would likewise fail to state a claim, the dis-
trict court necessarily acted within its discretion in denying class certifi-
cation.
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