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Hardy v. Regions Mortgage Class Action Defense Case: Eleventh Circuit Holds No Private Right Of Action Under RESPA

District Court Properly Granted Defense Motion for Judgment on the Pleadings in Class Action Because no Private Right of Action Exists Under Federal Real Estate Settlement Practices Act (RESPA) Eleventh Circuit Holds

On May 26, 2006, the Court of Appeals for the Eleventh Circuit affirmed a judgment entered on a motion for judgment on the pleadings in a putative class action alleging RESPA (Real Estate Settlement Practices Act) violations on the ground that no private right of action exists under Section 10 of RESPA. Hardy v. Regions Mortgage, Inc., ___ F.3d ___, 2006 WL 1452666 (11th Cir. 2006). Separate articles discuss various issues presented by claims under RESPA.

In Hardy, plaintiffs refinanced their home with Regions Mortgage in 1996 and later received from Cendant Corporation about a “Shoppers Advantage” program that, for $5 a month, entitled plaintiffs to discounts from certain retailers. Plaintiffs joined the program and authorized Regions to add the $5 monthly charge to their mortgage payment. Time passed, and plaintiffs forgot about the Shoppers Advantage program. In 2003, however, they noticed that the $5 monthly fee “had been paid out of their escrow account but was not listed on their mortgage statements.” Plaintiffs filed a putative class action alleging that Regions had violated RESPA by failing to include the $5 fee on their escrow account statement, and had conspired with Cendant to violate RESPA. The district court granted judgment on the pleadings because the complaint alleged a violation of Section 10 of RESPA, for which no private right of action exists, rather than Section 6 of RESPA, which provides for certain private rights of action.

The Eleventh Circuit affirmed. The Hardy court explained that Section6 of RESPA requires that federally related mortgage lenders disclose that “the loan may be assigned, sold or transferred” during its life, and provides for a private right of action for noncompliance. Section 10 of RESPA, however, requires lenders to “provide annual escrow account statements that clearly itemize ‘the amount of the borrower’s current monthly payment . . . the total amount paid out of the escrow account during the period for taxes, insurance premiums, and other charges . . ., and the balance in the escrow account at the conclusion of the period.’” However, Congress did not provide for private rights of action for noncompliance; rather, “the Secretary shall assess . . . a civil penalty” instead. Because plaintiffs alleged a violation of Section 10 of RESPA, and because there is no private right of action under Section 10, the Eleventh Circuit affirmed the judgment.

NOTE: Because it was unnecessary, the Eleventh Circuit did not discuss the fact that Congress did not afford private rights of action for every conceivable alleged violation of Section 6.

Download PDF of Hardy v. Regions Mortgage, Inc.