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AARP Asks Supreme Court to Uphold Competition in Mortgage Lending Market

The U.S. Supreme Court is considering whether a private home buyer who is not herself directly financially harmed can sue a settlement services company for violating federal law designed to ensure fair and open competition. AARP argues that violations of the federal Real Estate Settlement Procedures Act (RESPA) reduce competition to the detriment of all purchasers, and that in recognition of that Congress expressly gave home buyers the right to sue and collect damages.


In 2006, Denise Edwards sued First American and First American Title alleging that they paid kickbacks to Tower City Title Agency in exchange for Tower City referring all title insurance underwriting business to First American Title. Although Edwards could not prove that she was overcharged in her transaction, she argued that the referral agreement was illegal under RESPA. She contends that the practice harmed competition in the real estate title market generally, keeping out competitors who could have provided a wider array of products, better consumer services and other benefits competition brings. In 2007 four major title insurers, including First American, held 90 percent of the market.

First American argued that Edwards had no standing to sue. First American said Edwards was not injured financially by any alleged practices because her state, Ohio, sets a statewide uniform rate for title insurance. Edwards agreed that she did not pay more than she would have for another company’s title insurance in Ohio at the time of purchase, but that First American’s anticompetitive practices suppressed potential reductions in costs in the title insurance market, suppressed improvements in customer service and created other harms that were addressable under the law.

RESPA broadly prohibits kickbacks in real estate settlements. Recognizing that consumers needed "greater and more-timely information" and protection from "unnecessarily high settlement charges caused by … abusive business practices," Congress specifically contemplated enforcement of the law by giving home buyers the power to sue for statutory damages.

Trial and appeals courts agreed with Edwards, and First American appealed to the U.S. Supreme Court. Attorneys with AARP Foundation Litigation filed AARP's "friend of the court" brief in the case, in conjunction with three consumer advocacy groups, arguing that lawsuits by homeowners were specifically envisioned by Congress when it enacted RESPA, and that by being part of the larger market of home buyers who are harmed by anticompetitive practices, Edwards has a distinct interest and stake in this litigation. The brief cites studies and reports that document a history of anticompetitive practices that harmed home buyers and potential home buyers, and details how these studies and reports led to the enforcement provisions in the RESPA law. Finally, the brief compares RESPA to other consumer protection laws that courts have ruled similarly provide for damage recoveries even in the absence of proof of individual loss.

What's at Stake

A decision for First American would frustrate the intent of Congress by making it onerous for home buyers to enforce their consumer rights. Moreover, such a decision would send a strong message to consumers, homeowners, and others who rely on statutorily granted authority to enforce their rights — and that message would be that the courthouse doors are slamming shut on them.

Case Status

First American v.  Edwards is before the U.S. Supreme Court.