Mary E. Bjustrom, Individually and on Behalf of All Others Similary Situated v. Trust One Mortgage Corp.

Opinion by HILL; Concurrence by Judge BERZON.

OPINION

This is an appeal from an order granting summary judgment to Trust One Mortgage Corporation (Trust One) in a class action involving residential mortgages. The class is composed of all mortgagors whose Federal Housing Administration (FHA) mortgage loans were funded by Trust One and whose mortgage brokers were paid compensation in excess of 1% of the aggregate loan amount (the Bjustrom class). See note 6 infra.

Mary E. Bjustrom is the representative class member. The Bjustrom class asserted two causes of action: (1) breach of contract; and (2) violation of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601 , 2607. Bjustrom, in her individual capacity, asserted a third cause of action under the Washington State Unfair and Deceptive Trade Practices Act (state consumer protection act), Wash. Rev.Code § 19.86.

The district court granted summary judgment in favor of Trust One on all three claims. We affirm the judgment of the district court as to the two claims made by the Bjustrom class, breach of contract and violation of RESPA. However, we conclude that the court erred in including Bjustrom’s state consumer…

concurring.

In my view, Judge Kleinfeld’s dissent in Schuetz v. Banc One Mortgage Corp., 292 F.3d 1004 (9th Cir.2002), has it exactly right. Yield spread premiums and similar devices violate the anti-kickback provisions of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq., because they are payments from the lender to the broker and base the amount of the payment solely on the value of the loan to the lender. “The measure [of the payment] has nothing to do with how much work the broker does.” 292 F.3d at 1015 (Kleinfeld, J., dissenting).

There is one reason in addition to those discussed by Judge Kleinfeld for rejecting HUD’s latest view of the meaning of the anti-kickback provision, as applied to FHA loans. As the majority opinion explains, there is a 1% limit on direct origination fees for such loans. It therefore makes no sense to explain the YSP and SRP as spreading out fees that the borrower would otherwise pay up front, because it is not legal to charge those fees up front to the borrower. While I agree with Part III of the opinion that the FHA’s 1% cap does not forbid indirect payments by the lender, it is precisely because they are indirect…

322 F.3d 1201 Mary E. BJUSTROM, individually and on behalf of all others similary situated, Plaintiff-Appellant, v. TRUST ONE MORTGAGE CORP., Defendant-Appellee. No. 01-36076. United States Court of Appeals, Ninth Circuit. Argued and Submitted September 13, 2002. Filed March 20, 2003. Barry G. Reed and Hart L. Robinovitch, Zimmerman Reed, Scottsdale, AZ; John H. Bright, Mark A. Griffin, and Alexander Perkins, Keller Rohrback, Seattle, WA, for the plaintiffs-appellants. Thomas M. Hefferon, Goodwin Procter, Washington, DC; Scott Weaver, Jameson, Babbitt, Stites & Lombard, Seattle, WA; James W. McGarry, Boston, MA, for the defendant-appellee. Appeal from the United States District Court for the Western District of Washington; Marsha J. Pechman, District Judge, Presiding. D.C. No. CV-00-01166-MJP. Before HILL, * GOULD, and BERZON, Circuit Judges. Opinion by HILL; Concurrence by Judge BERZON. OPINION HILL, Circuit Judge. 1 This is an appeal from an order granting summary judgment to Trust One Mortgage Corporation (Trust One) in a class action involving residential mortgages. The class is composed of all mortgagors whose Federal Housing Administration (FHA) mortgage loans were…