Eddie Watt & Susan Watt v. GMAC Mortgage Corporation

Does RESPA forbid the charging of a fee to provide a payoff amount? The United States Court of Appeals for the Eighth Circuit says it does not. Specifically, the court found, in its August 4, 2006, ruling, that a response to a qualified written request from a borrower is not among the statements for which the law and HUD's Regulation X prohibit the imposition of a fee. The court noted that Congress had a second chance to prohibit a payoff statement fee when it amended RESPA in 1990, and did not do so. The court opined that, by omitting a fee from a list of prohibited fees, Congress intended to exclude it from the prohibition.

Before mortgage servicers rush off to start imposing such a fee, they should note that two other questions mentioned in the court's ruling were not decided.

First, the Watts argued that, if the payoff fee was not prohibited by RESPA, GMAC's $20 fee for preparation of a payoff statement was unreasonable, and should therefore be disallowed. The appellate court refused to consider this question on procedural grounds, leaving the issue undecided.

Second, the court noted that the lower court had declined to hear the Watts' claim that GMAC breached its contract with the Watts by imposing the fee. We presume the District Court determined that question should be a matter for state court jurisdiction.