Pennsylvania Federal Court Holds That RESPA Claims for Captive Reinsurance Arrangement Were Not Time-Barred

The United States District Court for the Eastern District of Pennsylvania recently held that a claim that a lender’s captive reinsurance arrangement violated the anti-kickback provisions of the Real Estate Settlement Procedures Act (“RESPA”) was not time-barred because the alleged kickbacks were a continuing violation.  See White v. PNC Fin. Servs. Grp., Inc., 2017 WL 85378 (E.D. Pa. Jan. 10, 2017).  In this putative class action, the plaintiffs alleged that the lenders referred them to mortgage insurers who then would reinsure the policies with the lender’s affiliated reinsurance company.  The plaintiffs alleged that these arrangements were prohibited kickbacks under RESPA.  See 12 USC 2607.  Although the Court initially dismissed the complaint because the plaintiffs brought it outside RESPA’s one-year statute of limitations, plaintiffs amended the complaint to allege that their claims had been equitably tolled.  The Court then denied the defendants’ motion to dismiss the amended complaint and agreed to stay the action while the Third Circuit Court of Appeals reviewed another RESPA equitable tolling case, Cunningham v. M & T Bank Corp., 814 F.3d 156 (3d Cir. 2016).  Before the Third Circuit decided Cunningham, however, the Consumer Financial Protection Bureau (“CFPB”) released its decision of In the Matter of PHH Corp., in which it decided, inter alia, that every loan payment made as part of a captive reinsurance arrangement was a RESPA violation that reset the limitations period.  The plaintiffs here then moved to amend their complaint again to allege, inter alia, that the defendants’ arrangement constituted a continuing violation of RESPA, and that the complaint therefore was within the one-year limitations period.  The defendants opposed, arguing that the Cunningham decision found that the limitations period for a RESPA claim begins at the closing,  and that the CFPB’s decision had been overturned by the United States Court of Appeals for the D.C. Circuit. 

The Court granted the plaintiffs’ motion as it relates to their RESPA claim.  First, it held that the Cunningham decision addressed the equitable tolling argument and found that the plaintiffs there should have been aware of the alleged scheme when they received their disclosures at the closing.  Neither Cunningham nor any other Third Circuit decision addressed the continuing violation argument raised by the plaintiffs.  Second, the Court held that the CFPB’s PHH decision had been vacated for a number of reasons, but that the Court there had expressly reserved the continuing violations issue for the CFPB to address on remand.  “The fact that the D.C. Circuit—having exhaustively reviewed the CFPB decision for error—knows exactly how the CFPB already ruled on this issue is telling. . . . Since the D.C. Circuit ruled on some of the CFPB's substantive RESPA findings, then certainly it could—and would—have reversed the CFPB on this issue had it disagreed with the CFPB's ruling on it.”  Therefore, the plaintiffs were granted leave to make this continuing violation claim.

For a copy of the decision, please contact Michael O’Donnell at or Michael Crowley at