FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT JULY 2, 2007 THOMAS K. KAH

N CLERK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 06- 11105

________________________ D. C. Do c k e tNo s . 9 6 - 0 0 9 1 7 - CV- VEH- S & 9 6 - 0 2 1 8 7 - CV- VEH 96- c v- 917 J O H N R O B E R T C U L P E P P E R , P A T R IC IA S T A RN E S C U L P E P P E R , on behal f o f th e m s e lv e s a n d a ll o th e r s s im ila r ly s itu a te d , P la in tif f s - A p p e lla n ts , v ersu s I R W I N M O R T G A G E C O R P O R A T I O N , f .k .a . I n la n d M o r tg a g e C o rp o r a tio n , D e f e n d a n t- A p p e lle e .

-- -- -- -- -- -- -- -- -- -- -- -- -- 98- c v- 2187 B E A T R IC E H IE R S , i n d i v i d u al l y an d as a rep resen t at i v e o f a cl ass o f si m i l arl y s itu a te d p e r s o n s , P la in tif f - A p p e lla n t, v ersu sHonora ble Gre g ory

A. Presnell, U.S. District Judg e for the Middle District of F lorida, * sitti ngby designation. 2 I R W I N M O R T G A G E C O R P O R A T I O N , f .k .a . I n la n d M o r tg a g e C o rp o r a tio n , D e f e n d a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e r n D i s tr i c to f A l a b a ma

_________________________ ( J ul y 2, 2007) B ef ore B IR C H and B L A C K , C i rc ui tJudg es , and P R E S N E L L , D i stri ctJudg e. * B IR C H , C i rc ui tJudg e: T he appe l l a nt s , J ohn a nd P a tr i c i a C ul pe ppe ra nd B e a tr i c e H i e r s , br oughtthe p r e s e n t c la s s a c tio n a g a in s t ap p e lle e I r w in M o r tg a g e C o rp o r a tio n ( “I r w in ” ) , a m ort gage l ender, pu rs uantt o t he R ea l E st at e S ett l em entP roce du re s A ct ( “ R E S P A ” ) , 12 U . S . C . § 2601 et . se q . T he appe l l a nt s a l l e ge d tha tI r w i n’ s pa y m e nt of y i e l d s pr e a d pr e m i um s t o m or t ga ge br oke r s - - - i n e xc ha nge f orde l i ve r i ng in te r e s t r a te s a b o v e th e “p a rr a te ” - - - v io la te d s e c tio n 8 o f R E S P A , 1 2 U .S .C . § 26 07 (a ). A ft era l engt hy procedural hi st ory, w hi ch i s det ai l ed herei n, the appel l ee s3

ul t i m a t e l y f

i l e d m ot i ons f

ors um m a r y j udgm e nta nd t o de c e r t i f y the c l a s s , both of w h ic h th e d is tr ic t c o u r t g r a n te d . O n appe a l , the appe l l a nt s a r gue tha tthe di s tr i c tc our te r r e d i n gr a nt i ng sum m ary j ud gm enti n favor of Irw i n for tw o rea sons: fi rs t , beca use the “ l aw -ofthe-c as e” do ctri ne ob l i gat es us t o adh er e t o o ur pri or rul i ng s i n t hi s c as e, despi t e a n i nt e r ve ni ng - - - a nd c onf l i c t i ng - - - s t a t e m e ntof

pol i c y by the D e pa r tm e ntof H ou si ng and U rban D evel op m ent(“ H U D ”) , the adm i ni stra t i ve agency c harged w i th e nf or c i ng R E S P A ; a nd, s e c ond, be c a us e , e ve n appl y i ng H U D ’ s t e s tf or l i a bi l i ty , I r w i n’ s y i e l d s pr e a d pr e m i um pa y m e nt s w e r e i l l e ga l unde rR E S P A . T he ap p el l an t s fu rth er arg u e th atth e d i stri ctco u rterred i n d ecert i fyi n g th e cl ass. U p o n rev i ew , w e co n cl u d e th attw o ex cep t i o n s t o th e l aw -o f-th e-case doc tr i ne appl y a nd tha tthe di s tr i c tc our ta c t e d pr ope r l y i n appl y i ng H U D ’ s t e s tf or lia b ility to th e f

a c ts o f ap p e lla n ts ’ c a s e a n d in c o n c lu d in g th a t I r w in w a s e n title d to s u m m a r y ju d g m e n t. W e a ls o c o n c lu d e th a t th e d is tr ic t c o u r t d id n o t a b u s e its di sc re t i on i n d ec er t i fy i ng the cl as s, du e t o i t s det erm i nat i on thati nd i vi du al i ss ues o f f a c tp r e d o m i n a t e i n th i s ty p e o f a c t i o n . A c c o r d i n g l y , w e A F F I R M. I . B AC KG RO UN D Th i s i s th e f

o u r th t i me w e h a v e h a d c a u s e t o r e v i e w th e ap p e l l a n t s ’ RESPA a c t i on a ga i ns tI r w i n. I n C ul pe ppe rv. I nl a nd M or t ga ge C orpor a t i on, 132 F . 3d 6924

( 1 1 th C ir . 1 9 9 8 ) ( “C u lp e p p e rI ” ) , w e r e v e r s e d a g r a n t o f s u m m a r y ju d g m e n t in f a vorof I r w i n, va c a t e d the di s tr i c tc our t ’ s de ni a l of c l a s s c e r t i f

i c a t i on, a nd r e m a nde d f

orf ur the rpr oc e e di ngs . I n C ul pe ppe rv. I nl a nd M or t ga ge C orpor a t i on, 14 4 F . 3d 71 7 (11 th C i r. 19 98 ) ( “ C ul pepp erII ”) , w e deni ed Irw i n’ s pet i t i on for a r e he a r i ng of

C ul pe ppe rI , a nd c l a r i f i e d ourde c i s i on i n tha tc a s e . I n C ul pe ppe rv. I r wi n Mo r t g a g e C o rp o r a t i o n , 2 5 3 F . 3 d 1 3 2 4 ( 1 1 th C i r . 2 0 0 1 ) ( “ C u l p e p p e rI I I ” ) we cl ar i fi ed the st andard for l i abi l i ty und erR E S P A ; w e a l so af fi rm ed the di stri ct court ’ s c l as s c er t i fi ca t i on . T he procedural backdrop l ea di ng t o t he pres entappeal i s , a s ours i s t e rc i r c ui tha s puti t , “ c um be r s om e buti m por t a nt . ” S c hue t z v. B a nc O n e M o r tg a g e C o rp ., 2 9 2 F .3 d 1 0 0 4 , 1 0 0 8 ( 9 th C ir . 2 0 0 2 ) . O u rr e v ie w o f

th is b a c k d r o p is a s f

o llo w s . F ir s t, w e b r ie f

ly d is c u s s th e f

a c ts a nd a l l e ga t i ons of

the appe l l a nt s ’ a c t i on a ga i ns tI r w i n. S e c ond, w e r e vi e w our ho l di ng s i n C ul pepp erI a nd C ul pepp erII , as w el l as the 19 99 S t at em entof P ol i cy is s u e d b y H U D in th e w a k e o f th o s e d e c is io n s . T h ir d , w e d is c u s s o u ro p in io n in C u l p ep p er III an d th e 2 0 0 1 S t at em en to f P o l i cy th atH U D i ssu ed i n d i rectresp o n se t o–a nd i n e xpl i c i tc r i t i c i s m of –C ul pe ppe rI I I . W e the n di s c us s the e f f e c tof the H U D 2001 S t a t e m e ntof P ol i c y on ourR E S P A c a s e l a w . F i na l l y , w e di s c us s the d is tr ic t c o u r t p r o c e e d in g s th a t le d to th e p r e s e n t ap p e a l. A . T h e B o r r o w e r s ’ A c tio n A g a in s t I r w inThis action was originally brought by

J ohn and Patricia

Culpepper. In 1998, Be atrice 1 Hiers’ RESP A ac tion was consolidated with the Culpeppers’ c ase, thereby g iving rise to the action that is pendingbefore us. T h e C u lp ep p er s ’ o ri gi n al l aw s u i twa s ac tu al l y b ro u ghtaga i n s tIn l an d

M o rt gage 2 Cor po ratio n ( “ Inla

nd” ), thepre de c e sso r l e nd e r f ro m who m th eCulpepp e rs ob taine d th e ir ho me mortg ag e. Inland subsequently chang ed its name to Irwin. F or ea se of referenc e, weref er to the appelleethroughout this opi nion as “Irwin.” 5 In 19 96 , the appel l ant s J oh n and P atri ci a C ul pepp erand B ea tri ce H i er s ( he r e i na f t e r , c ol l e c t i ve l y , “ the B or r ow e r s ” ) br oughtthe i ns t a nta c t i on, on be ha l f of 1 them se l ves a nd al l ot hers si m i l ar l y s i tuat ed, agai nstIrw i n, a m ort gage l ender, 2 a lle g in g th a t I r w in h a d a c te d ille g a lly in p a y in g y ie ld s p r e a d p r e m iu m s to th e ir m o r tg a g e b r o k e r s . A yi el d sp read p rem i u m (“ Y S P ”) i s “ a p aym en tm ad e b y a [ m or t ga ge ] l e nde rt o a [ m or t ga ge ] br oke ri n e xc ha nge f ortha tbr oke r ’ s de l i ve r i ng a m or t ga ge tha ti s a bove the ‘ pa rr a t e ’ be i ng of f e r e d by the l e nde r . ” H e i m m e r m a nn v. F i rs tU ni on M ort gage C orp. , 30 5 F . 3d 12 57 , 12 59 (11t h C i r. 20 02 ). T he “ ‘ par r a t e ’ r e f e r s t o the r a t e a tw hi c h the l e nde rw i l l f und 100% of

a l oa n w i th no pr e m i um s ordi s c ount s t o the br oke r . ” S c hue t z , 292 F . 3d a t1007. W he n a m ort gage brok erbrou gh tIrw i n a l oan atbel ow the par r at e, the brok erw as r e q u ir e d to p a y d is c o u n t p o in ts f o rth e lo a n . S e e C u lp e p p e rI , 1 3 2 F .3 d a t 6 9 4 . C on vers el y, w hen a m ort gage brok erbrou gh tIrw i n a l oan ata r at e abo ve the par r a t e , I r w i n a gr e e d t o pa y a Y S P t o the m or t ga ge br oke r . I d. G e ne r a l l y s pe a ki ng, the Y S P w as ca l cul at ed as a per ce nt age of the t ot al am ou ntof the l oan; the exact6

a m ountw a s de t e r m i ne d by “ the e xt e ntt o w hi c h the a c tua l i nt e r e s tr a t e e xc e e d[ e d] the pa rr a t e . ” H e i m m e r m a nn, 305 F . 3d a t1259. T he pa r t i c ul a rf

a c t s the s e c ons ol i da t e d c a s e s a r e noti n di s put e . B oth of the B orrow er s obt ai ned t hei r f eder al l y i nsured ho m e m ort gage l oans throu gh thi rd p a r ty m o r tg a g e b r o k e r s , a n d I r w in , a s th e le n d e r , w a s th e s o u r c e o f th e f u n d s in ea ch tra nsac t i on . T he C ul pepp er s obt ai ned t hei r l oan w i th Irw i n t hrou gh P re m i er e M o r tg a g e C o m p a n y ( “P r e m ie r e ” ) , a m o r tg a g e b r o k e r . T he i nt er es tra t e thatthey agre ed t o i n con nect i on w i th t hei r m ort gage w as 7. 5% , despi t e the fa ctthatthe par ra t e–thati s, the ra t e a tw hi ch Irw i n w as w i l l i ng t o m ake the sa m e l oan– w as a c tu a lly 7 .2 5 % . B e c a u s e th e lo a n P r e m ie ra s s ig n e d to I r w in w a s a b o v e p a r , I r w in p a id P r e m ie ra Y S P . A t th e c lo s in g o f th e tr a n s a c tio n , th e C u lp e p p e r s d ir e c tly p a id P r e m ie r e a lo a n o r ig in a tio n f e e o f $ 7 6 0 .5 0 ; in a d d itio n to th is a m o u n t, I r w in p a id to P r e m ie r e a Y S P o f

$ 1 ,2 6 3 .2 1 , ap p r o x im a te ly 1 .6 7 5 % o f th e lo a n a m o u n t. A ppe l l a ntH i e r s obt a i ne d he rl oa n w i th I r w i n thr ough H om e buy e r s M or t ga ge Incorporat ed (“ H M I” ), anot her thi rd party m ort gage brok er . H i er s a gree d t o an i nt e r e s tr a t e of

7% i n c onne c t i on w i th he rl oa n, de s pi t e the f a c ttha tthe pa rr a t e f

or a n a d ju s ta b le r a te lo a n w a s 5 .5 % . A tthe c l os i ng, H i e r s pa i d H M I a n or i gi na t i on f e e o f $ 1 ,5 4 4 a n d a lo a n d is c o u n t o f $ 1 4 .6 4 . I n a d d itio n to th e s e f e e s , I r w in p a id H M I a Y S P o f

$ 4 ,5 3 8 .8 7 , ap p r o x im a te ly 2 .8 7 5 % o f th e to ta l lo a n a m o u n t.Congress enacted RESPA with the goal of “prote ct[ing] the America n home-buy

ing 3 public from unre asonably and unnec essarily

inflated pric es in the home purchasingproce ss.” See 64 F ed. Reg . 10081-82 (Ma rch 1, 1999) ; see also 12 U.S.C. § 2601(a). In addre ssing real e statese ttl e ment p ro c e dure s, Congre ss s ought to, amongoth e r t hing s, “ e ff

e c t c e rt ain cha

ng e s in the settlement proc ess for residential re al estatethat will result (1) in more e ffe ctive adva nce disclosure to home buyers a nd sellers of settlement costs; (2) in the elimination of kickbac ks or ref erral fe es that tend to incre ase unne cessa rily the costs of c ertain settlement service s . . . .” 12 U.S.C. § 2601(b); see also 64 Fed. Reg . 10082. 7 A l though the Y S P s w e r e di s c l os e d t o the B or r ow e r s a tthe i rc l os i ngs a nd w er e in clu d ed in th eir r es p ec ti v e H U D clo sin g fo rm s, th ey ar g u ed th at Ir w in ’s p aym en to f Y S P s fro m Irw i n t o th ei r b ro k ers, fo r o b t ai n i n g ab o v e p ar m o rt g ag es, vi ol a t e d R E S P A . S pe c i f i c a l l y , the B or r ow e r s a r gue d tha tI r w i n’ s pa y m e ntof 3 Y S P s vi ol at ed se ct i on 8 o f R E S P A , w hi ch proh i bi t s the paym entof “ any f ee , ki c kba c k, orthi ng of

va l ue pur s ua ntt o a ny a gr e e m e ntorunde r s t a ndi ng, or a l or ot herw i se , thatbu si ness i nci dentt o o r par tof a r ea l es t at e s ett l em entse rvi ce i nvol vi ng a f

e de r a l l y r e l a t e d m or t ga ge l oa n s ha l l be r e f e r r e d t o a ny pe r s on. ” 12 U . S . C . § 2 60 7(a) . T he B orrow er s a rgued t hatthe Y S P s c on st i tut ed i l l egal re fe rr al fe es u n d erR E S P A , i n th at th ey w er e p aid fo r n o th in g m o re th an a b ro k er ’s d e liv e r y o f

a lo a n w ith a h ig h e rin te r e s t r a te . I n r e s p o n s e , I r w in c o n te n d e d th a t its p a y m e n t o f

Y S P s to m o r tg a g e b r o k e r s w e r e n o t k ic k b a c k s o rr e f e r r a l f e e s , b u t, r a th e r , th a t th e p a y m e n ts f e ll w ith in th e s a f

e h a rb o ro f

R E S P A , 1 2 U .S .C . § 26 07 (c ), w hi ch prov i des that“ [n] ot hi ng i n t hi s s ec t i on shal l be construed as proh i bi t i ng . . . the paym entt o any pers on of a bon a f i de . . . com pensat i on or ot her8

p a y m e n t f

o rg o o d s o rf

a c ilitie s a c tu a lly f

u r n is h e d o rf

o rs e r v ic e s a c tu a lly p e r f o rm e d .” I r w i n m ove d f

ors um m a r y j udgm e nt , w hi c h the di s tr i c tc our tgr a nt e d. T he subsequentappeal re sul t ed i n o ur fi rs tdeci si on i n t hi s c as e, C ul pepp erI. B . C ul pepp erI a nd II , and H U D ’ s 199 9 S t at em entof P ol i cy In C ul pepp erI, w e f

i rs tno t ed that“ [n] o ci rc ui tcourt[had ye t ] addres se d wh e th e ra [ YS P ] v i o l a t e s R E S P A. ” 1 3 2 F . 3 d a t6 9 5 . I n a d d r e s s i n g th a ti s s u e , we hel d t hata l ender’ s pay m entof a Y S P t o a brok erw ou l d b e a n i l l egal re fe rr al fe e un der R E S P A “ i f: (1) apaym entof a thi ng of val ue; (2) [ w as ] m ade pursuantt o an a gr e e m e ntt o r e f

e rs e tt l e m e ntbus i ne s s ; a nd ( 3) a r e f e r r a l a c tua l l y oc c ur r [ e d] . ” I d. at69 6. W e c on cl ud ed thatthe Y S P i n t he C ul pepp er s’ ca se vi ol at ed R E S P A , si nce i tsa t i sf i ed al l three re qu i re m ent s. S peci fi ca l l y, the Y S P had b ee n p ai d t o P re m i er e pu rs uantt o a pre- exi st i ng arra ng em entbetw ee n P re m i er e a nd Irw i n, and t he l at er a s s ig n m e n t o f

th e C u lp e p p e r s ’ lo a n , f r o m P r e m ie r e to I r w in , h a d , in f a c t, o c c u r r e d . I d . W e a l s o r e

j e c t e d the a r gum e nttha tthe Y S P w a s bona f i de c om pe ns a t i on f

or a “ good” or“ s e r vi c e ” pe r f or m e d by P r e m i e r e , s uc h tha ti ts houl d be e xe m ptf r om l i a bi l i ty unde r12 U . S . C . § 2607( c ) . I d. a t696- 97. W e f ound tha tI r w i n ha d not s how n tha tthe Y S P w a s pa y m e ntf ora “ good” unde rR E S P A , be c a us e no9

i d en t i fi ab l e “ g o o d ” w as ev er tran sferred fro m P rem i ere t o Irw i n ; i n fact , Irw i n w as, f r om the out s e t , the or i gi na l s our c e of the f unds a nd thus the s ol e ow ne rof the l oan. Id. at69 6. N or had Irw i n est abl i shed thatthe Y S P w as paym entfor a “s e r v ic e ” th a t P r e m ie r e h a d p r o v id e d , b e c a u s e : ( 1 ) th e C u lp e p p e r s h a d a lr e a d y p a id a s e p a r a te lo a n o r ig in a tio n f e e d ir e c tly to P r e m ie r e to c o v e rits “s e r v ic e s ” ; ( 2 ) I r w in ha d s t a t e d i n di s c ove r y tha ti tpa i d P r e m i e r e a Y S P “ f orthe r i ghtt o s e r vi c e the [ Cu l p e p p e r s ’ ] l o a n , ” R6 - 1 4 9 , Ex h . 1 6 a t6 , th e r e b y b e l y i n g th e n o t i o n th a tth e Y SP w a s i nt e nde d t o c om pe ns a t e P r e m i e r e f orthe l oa n s e r vi c e s i tpr ovi de d t o the C ul pe ppe r s ; a nd ( 3) the br oke r a ge “ s e r vi c e s ” tha tP r e m i e r e pr ovi de d w e r e the s a m e , w h e th e rth e lo a n w a s a b o v e p a r , b e lo w p a r , o ra t p a r . I d . a t 6 9 6 - 9 7 . In fi nd i ng thatthe C ul pepp er s’ Y S P w as a r ef erra l fe e thatdi d n otfa l l un der the c om pe ns a bl e goods / s e r vi c e s s a f e ha rborof

§ 2607( c ) , w e c onc l ude d tha tthe Y S P w as i l l egal un der § 26 07 (a ). Id. at69 7. O ur C ul pepp erI dec i si on re fr ai ned f r om i nqui r i ng w he the rthe Y S P tha tI r w i n ha d pa i d t o P r e m i e r e w a s r e a s ona bl e or a “ f a i rm a r ke tpr i c e , ” s t a t i ng tha tthe “ r e a s ona bl e ne s s ” i nqui r y onl y appl i e d i f the fi rs tst ep of the § 2 60 7(c) sa fe harbor w as sa t i sf i ed–t hati s, i f i tw as fi rs tshow n t hat th e YS P c o v e r e d a c o m p e n s a b l e “ g o o d ” o r“ s e r v i c e . ” I d . a t6 9 7 . Ac c o r d i n g l y , we re vers ed the di stri ctcourt ’ s gra ntof sum m ary j ud gm entand rem anded for further p ro ceed i n g s.10

I n C ul pe ppe rI I , w e de ni e d a pe t i t i on f ora r e he a r i ng of

C ul pe ppe rI . S e e 144 F .3 d a t 7 1 8 . I n d o in g s o , h o w e v e r , w e s a w f it to c la r if

y o u rh o ld in g in C u lp e p p e rI . W e i n d i cat ed th atC u l p ep p er I h ad n o tb een i n t en d ed t o co n cl u si v el y est ab l i sh l i a bi l i ty on the pa r tof

I r w i n, norha d C ul pe ppe rI s t a t e d tha tY S P s f r om a m or t ga ge l e nde rt o a m or t ga ge br oke rw e r e pe rs e i l l e ga l unde rR E S P A . I d. R a the r , the C ul pepp erI dec i si on had b ee n l i m i t ed t o t he qu es t i on of w hether the di stri ctcourt h a d e r r e d i n g r a n t i n g s u mma r y j u d g me n tf o rI r w i n o n th e Cu l p e p p e r s ’ RESPA a c tio n . I d . B e c a u s e I r w in h a d f a ile d to e s ta b lis h th a t th e Y S P it h a d p a id to P re m i er e had been com pensat i on for e i ther goo ds or se rvi ce s thatP re m i er e had pr ovi de d, w e c onc l ude d tha tthe di s tr i c tc our tha d a c t e d pr e m a tur e l y i n gr a nt i ng I r w i n s um m a r y j udgm e nta s a m a t t e rof l a w . I d. a t718- 19. W e s t a t e d tha tnothi ng in C u lp e p p e rI w o u ld p r e v e n t I r w in , o n r e m a n d , f r o m a r g u in g its p o s itio n a t tr ia l. I d. S ubs e que ntt o ourde c i s i ons i n C ul pe ppe rI a nd C ul pe ppe rI I , H U D i s s ue d a 19 99 S t at em entof P ol i cy (“ S O P ”) i nt ended “ t o cl ar i fy i t s posi t i on on l ender p a y m e n ts to m o r tg a g e b r o k e r s .” S e e 6 4 F e d . R e g . 1 0 0 8 0 . H U D f ir s t s ta te d th a t it w a s i s s ui ng the 1999 S O P be c a us e C ongr e s s ha d i ns truc t e d i tt o do s o, ba s e d on the f a c ttha t“ C ongr e s s [ ha d] ne ve ri nt e nde d pa y m e nt s by l e nde r s t o m or t ga ge brok er s f or go od s or f

ac i l i t i es ac tual l y f

urni shed or for s ervi ce s a ctual l y per form ed11

t o b e vi ol at i on s of [ R E S P A ] . . . . ” I d. (c i t at i on om i t t ed). H U D ’ s S O P i nd i ca t ed th a t m o r tg a g e b r o k e r s p r o v id e d m a n y v a lu a b le s e r v ic e s to h o m e b u y e r s in proces si ng ho m e m ort gage l oans, and t hati tw as ac ce pt abl e f or m ort gage brok er s t o r e c e i ve f

e e s a s c om pe ns a t i ons f

orthos e s e r vi c e s - - - e i the rdi r e c t l y f r om the bo rr ow eror i nd i re ct l y f rom the l ender - -- so l on g as the com pensat i on bo re a

“ re as on abl e r el at i on shi p t o t he m arketval ue of the go od s, fa ci l i t i es , or se rvi ce s pr ovi de d. ” I d. a t10086. H U D a l s o e xpr e s s l y s t a t e d i t s vi e w tha tpa y m e nt s by le n d e r s to m o r tg a g e b r o k e r s , in c lu d in g Y S P s , w e r e n o t ille g a l p e rs e . I d . a t 1 0 0 8 4 . R a the r , H U D r e c om m e nde d a tw o- pa r t“ r e a s ona bl e ne s s t e s t ” t o de t e r m i ne w hether apaym entt o a m ort gage brok ersuch as a Y S P w as perm i ss i bl e und er R E S P A . T he f

i r s ts t e p of

the i nqui r y unde rthe H U D t e s tw a s “ w he the rgoods or f a c i l i t i e s w e r e a c tua l l y f

ur ni s he d ors e r vi c e s w e r e a c tua l l y pe r f or m e d f orthe c o m p e n s a tio n p a id .” I d . T h e S O P lis te d a n u m b e rc o m p e n s a b le “s e r v ic e s ” th a t a m o rt g ag e b ro k er m i g h tp ro v i d e i n a m o rt g ag e tran sact i o n , su ch as, am o n g o th ers, t a ki ng i nf

or m a t i on f

r om the bor r ow e ra nd f

i l l i ng outthe m or t ga ge appl i c a t i on; a na l y z i ng the pr os pe c t i ve bor r ow e r ’ s i nc om e a nd de bta nd pr e - qua l i f y i ng the b o r r o w e rf

o ra m o r tg a g e ; e d u c a tin g th e b o r r o w e ra b o u t th e v a r io u s lo a n p r o d u c ts a va i l a bl e t o hi m orhe r ; a nd a s s i s t i ng the bor r ow e ri n the m or t ga ge f i na nc i ng, f

r om c o m m e n c e m e n t o f

th e p r o c e s s to th e c lo s in g . I d . a t 1 0 0 8 5 .12

T he s e c ond s t e p of

the H U D t e s tthe n a s ke d w he the rthe t ot a l c om pe ns a t i on pa i d t o the m or t ga ge br oke rw a s “ r e a s ona bl y r e l a t e d” t o the va l ue of thos e goods or se rvi ce s thathe furni shed. Id. at10 08 6. A s t o t hi s s ec on d st ep, H U D st at ed that court s w er e t o exam i ne the “ t ot al com pensat i on ” pai d t o t he brok er-- - thati s, fe es pai d b y bot h t he l ender and the bu ye r - -- as a l um p sum i n o rdert o ass es s w hether i tw a s “ r e a s ona bl y r e l a t e d” t o the s e r vi c e s pr ovi de d. I d. C . C ul pepp erII I a nd H U D ’ s 200 1 S t at em entof P ol i cy I n 2 0 0 1 , w e a g a in a d d r e s s e d th e B o r r o w e r s ’ R E S P A a c tio n a g a in s t I r w in . T h e is s u e b e f

o r e u s in C u lp e p p e rI I I w a s w h e th e rth e d is tr ic t c o u r t h a d e r r e d in c e r t i f y i ng a c l a s s a c t i on pur s ua ntt o F e de r a l R ul e of C i vi l P r oc e dur e 23( c ) . 253 F . 3 d at1 3 2 5 -2 6 . A l th o u g h C u l p ep p er III i n v o l v ed th e n arro w q u est i o n o f cl ass c e r tif ic a tio n , w e a c c e p te d th e p a r tie s ’ c o n te n tio n th a t w e c o u ld o n ly d e te r m in e if cl as s c er t i fi ca t i on w as approp ri at e i f w e f i rs t“ se t t l e[ d] on a rul e of l i abi l i ty” un der 1 2 U .S .C § 2 6 0 7 ( a ) a n d ( c ) . I d . a t 1 3 2 7 . T h u s , in C u lp e p p e rI I I w e s o u g h t to c ons true the pr ope rt e s tf orl i a bi l i ty unde rR E S P A , i n l i ghtof H U D ’ s r e c e nt p r o n o u n c e m e n t o n th e q u e s tio n v ia th e 1 9 9 9 S O P . F i rs t , w e i nd i ca t ed ou r vi ew thatthe 19 99 H U D S O P on R E S P A w as

“ am bi gu ou s. ” I d at13 27 . W e then con strued the tw o-partt es tthathad b ee n set forth i n t he 19 99 S O P . W e observed t hatthe fi rs tst ep un der thatt es tw as an13

as se ss m entof w hether the paym ent s a ti ss ue w er e f or se rvi ce s “ ac tual l y per form ed f o rth e c o m p e n s a tio n p a id .” I d . a t 1 3 2 9 - 3 0 ( c itin g 6 4 F e d . R e g . a t 1 0 0 8 4 ) . W e construed thatfi rs tst ep as re qu i ri ng som e l evel of “ exchange” betw ee n t he brok er a n d th e le n d e r . I d . a t 1 3 2 9 ( s ta tin g th a t “th e in q u ir y in th is s te p in c lu d e s n o t o n ly w he the rthe br oke rpe r f or m e d s e r vi c e s , buta l s o w he the rthe br oke rpe r f or m e d the se rvi ce s a s par tof a s ervi ce s- for- m on ey exchange”). T hati s, w e hel d t hati tw as note nough f

ora l e nde rt o s how tha ts e r vi c e s ha d be e n pe r f or m e d by the m or t ga ge brok er ; ra ther, w e s t at ed thatthe l ender w ou l d h ave t o sho w thatthe se rvi ce s that w ere p erfo rm ed w ere d i rect l y t i ed t o th e Y S P p aym en t . Id . at1 3 2 9 -3 0 ; see al so S chuet z, 29 2 F . 3d at10 10 (s t at i ng thati n C ul pepp erII I w e hel d t hat“ the t es tfor § 8 l i a bi l i ty i s notw he the rthe br oke rpe r f or m e d som e s e r v i c e s , b u tw h e th e rth e Y SP is p a y m e n t f

o r tho se se rvi ce s” ). W e the n s t a t e d tha t , i f

the c om pe ns a t i on t o the br oke rw a s nots how n t o be di r e c t l y t i e d t o the s e r vi c e s pe r f or m e d - - - tha ti s , i f

the Y S P w a s nots how n t o be

“ pa y m e ntf

orthos e s e r vi c e s , ” C ul pe ppe rI I I , 253 F . 3d a t1331 — the n the s e c ond st ep of the H U D anal ys i s ( w hether the t ot al com pensat i on w as re as on abl e) w as w ho l l y unn ec es sa ry . R ather, i f the defendantfa i l ed atthe ou t se tt o est abl i sh that the Y S P paym entw as di re ct l y t i ed t o t he se rvi ce s per form ed, then t he Y S P w as l i kel y are fe rr al fe e, w hi ch, w e hel d, w as “ i l l egal , peri od ” und erR E S P A . Id. at14

13 30 . A ft erar t i cul at i ng thi s app roac h t o l i abi l i ty und erR E S P A , w e i nd i ca t ed that c la s s c e r tif

ic a tio n in th e B o r r o w e r s ’ c a s e w a s p r o p e r , b e c a u s e th e Y S P s w e r e p a id pur s ua ntt o s t a nda r di z e d, a c r os s - the - boa r d a gr e e m e nt s be tw e e n the l e nde ra nd the m o r tg a g e b r o k e r , a n d , th e r e f o r e , th e r e q u ir e m e n ts o f R u le 2 3 h a d b e e n s a tis f ie d . I d . a t 1 3 3 2 . In the w ake of our deci si on i n C ul pepp erII I, H U D is s u e d a s e c o n d S O P in O ct ob er20 01 , ent i t l ed, i n p er t i nentpart , “ C l ar i fi ca t i on of S t at em entof P ol i cy 1999- 1 R e ga r di ng L e nde rP a y m e nt s t o M or t ga ge B r oke r s . ” S e e 66 F e d. R e g. 5 3 0 5 2 ( O c t. 1 8 , 2 0 0 1 ) . H U D s ta te d th a t th e n e w S O P w a s in te n d e d to “e lim in a te a n y a m b ig u ity c o n c e r n in g th e D e p a r tm e n t’s p o s itio n w ith r e s p e c t to [ Y S P s ].” I d . H U D al so i nd i ca t ed thatthe S O P w as bei ng i ss ued i n d i re ctre spon se t o C ul pepp er II I, i nd i ca t i ng that“ [t ] he need for further c l ar i fi ca t i on of H U D ’ s posi t i on , as se t forth i n t he 19 99 [S O P ] , on the tre atm entof l ender payments t o m ort gage brok er s un der [ 12 U . S . C . § 2 60 7(a) ] i s e vi dentfr om the re ce ntdeci si on [i n C ul pepp erII I] . ” Id. at53 05 4. H U D w enton t o st at e thati t“ di sa gree [d] w i th t he j ud i ci al in te rp r e ta tio n ” o f

§ 2 6 0 7 th a t w e h a d s e t f o r th in C u lp e p p e rI I I . I d . H U D ’ s 2001 S O P r e i t e r a t e d the tw o- s t e p t e s ti tha d e s t a bl i s he d i n the 1999 S O P , i nd i ca t i ng thatthe prop eranal ys i s i nv ol ved an ass es sm ent , fi rs t , i nt o w hether com pensabl e s ervi ce s w er e a ctual l y per form ed by the brok er , and, se cond , w hether15

th e t o t a l c o m p e n s a t i o n p a i d t o th e b r o k e rwa s r e a s o n a b l e . I d . a t5 3 0 5 3 . T h e S OP “r e s ta te [ d ]” H U D ’s p o s itio n th a t Y S P s w e r e n e ith e rp e rs e le g a l, n o rp e rs e ille g a l. I d . a t5 3 0 5 4 . Ra th e r , H U D a d v i s e d th a te a c h c a s e i n v o l v i n g a Y SP p a y me n tf r o m a l ender t o a brok ershou l d b e a ss es se d b as ed on “ the spec i fi c f ac tual ci rc um st ance s appl i c a bl e t o e a c h tr a ns a c t i on i n w hi c h a [ Y S P ] i s us e d. ” I d. H U D th e n c la r if

ie d its tw o - s te p te s t f

o rY S P p a y m e n ts u n d e rR E S P A . A s to st ep on e, H U D st at ed thati tw as i m prop ert o requi re (a s w e had i n C ul pepp erII I) thatthere be a c l ea r a nd di re ctl i nk betw ee n t he “ se rvi ce s” the m ort gage brok er p r o v id e d a n d th e c o m p e n s a tio n th a t w a s p a id . I d . R a th e r , H U D o b s e r v e d th a t a le n d e rm ig h t o f

te n b e a w a r e th a t a m o r tg a g e b r o k e rw a s p e r f o r m in g c o m p e n s a b le s e r vi c e s f

orboth the l e nde ra nd the br oke r , e ve n i f the r e l a t i ons hi p be tw e e n the s e r vi c e s pr ovi de d a nd the c om pe ns a t i on pa i d w a s note xpl i c i t l y s e tf or th i n a c ontr a c tua l a gr e e m e nt . I d. H U D r e c om m e nde d tha tthe i nqui r y i ns t e a d f oc us on w hether c om pensabl e s ervi ce s–such as tho se i thad l i st ed i n i t s 199 9 S O P –h ad been prov i ded b y the m ort gage brok er , i rr es pect i ve of w hether the part i es had agre ed thatthe Y S P w as i nt ended t o cov ertho se se rvi ce s. Id. In cl ar i fy i ng st ep one i n thi s w a y , the S O P r e j e c t e d the “ e xc ha nge ” a na l y s i s tha tha d be e n appl i e d by ou r c ou rti n C ul pepp erII I. H U D ’ s S O P al so m ade c l ea r thati f any c o m p e n s a b le

“ s e r vi c e s ” w e r e , i n f

a c t , pr ovi de d by a br oke r , the pr ope ra na l y s i s w oul d the n t o be16

m o v e to s te p tw o , th a t is , w h e th e rth e to ta l c o m p e n s a tio n w a s r e a s o n a b ly r e la te d to th o s e s e r v ic e s . A s t o tha ts e c ond s t e p, H U D r e i t e r a t e d tha tthe i nqui r y s houl d f oc us on w hether the “ t ot al com pensat i on ” thatthe m ort gage brok erre ce i ved w as

“ r e a s ona bl y r e l a t e d t o the t ot a l s e tof goods orf

a c i l i t i e s a c tua l l y f

ur ni s he d or se rvi ce s per form ed. ” I d. H U D st at ed thatthe t ot al com pensat i on w as t o b e vi ew ed a s a w hol e ( notj us tthe Y S P i n i s ol a t i on) , a nd tha ta n a s s e s s m e ntof w he the rthe co m p en sat i o n w as “ reaso n ab l e” i n v o l v ed b o th an o b j ect i v e co m p o n en t(th ati s, ty pi c a l m or t ga ge br oke rc om pe ns a t i on i n c om pa r a bl e m a r ke t s ) a nd a s ubj e c t i ve c o m p o n e n t ( th a t is , in lig h t o f th e p a r tic u la rs e r v ic e s th a t th e b r o k e rp r o v id e d ) . I d . D . T he Im pactof the 20 01 S t at em entof P ol i cy on O ur C as e L aw S u b s e q u e n t l y , i n He i m m e r m a n n v . F i r s tUn i o n Mo r t g a g e C o rp o r a t i o n , we a ddr e s s e d the i m pa c tof the H U D 2001 S O P . A l though the B or r ow e r s i n the in s ta n t c a s e w e r e n o t p a r tie s to H e im m e r m a n n , th e f a c ts o f th a t c a s e w e r e s im ila rto th e B o rro w ers’ act i o n ; w e ch aract eri zed H ei m m erm an n as “ o n e o f sev eral [cases] de a l i ng w i th R E S P A ’ s e f f e c ton the l e ga l i ty of

the pa y m e ntof

[ Y S P s ] by m or t ga ge le n d e r s to m o r tg a g e b r o k e r s .” 3 0 5 F .3 d a t 1 2 5 9 . T h e is s u e b e f o r e u s in H ei m m erm ann w as w hether the di stri ctcourthad app l i ed the corre ctl egal st andard f o rR E S P A lia b ility in th e c o u r s e o f c e r tif y in g a c la s s in th a t c a s e .Se eChevron U. S.A ., Inc . v . N atura l Re s. De f. Counc il, 46 7 U .S. 83 7, 84 4, 10 4 S. Ct. 4 27 78 , 2 78 2 ( 19 84 ) ( statin gthat whereCongre ss h a s d e le g ate d a uth ority to a n ag e nc y to e luc idate a provision of a

statute, the ag ency ’s rules c arr y the full forc e of la

w and a re g iven controlling weight unless they

arearbitra

ry, capricious, or manife stly contra ry to the statute). Other c irc uit s, inc ludingtheNinth Circ uit and theSe c on d Circuit , h avesim ila rly 5 conclude d that HUD’ s 2001 SOP construing RESPA is entitl ed to Chevron de ference . See, e.g ., Schuetz, 292 F.3d at 1012, 1014 (statingthat the 2001 SOP is entit led to Chevron def erence a nd that it “provides the a

ppropriatestandard of

liability for YSPs under RESPA”); seealso Krusev. Wells Farg o Home Mortg ag e Inc., 383 F .3d 49, 61 (2d Cir. 2004) (a ffording Chevron def erence to the 2001 SOP in the conte x t of section 8(b) of RESPA). 17 Atth e o u t s e t , He i m m e r m a n n a d d r e s s e d th e ap p l i c a b i l i ty o f th e 2 0 0 1 HU D S O P on ou r R E S P A ca se l aw . F i rs t , w e hel d t hatthe 20 01 S O P w as no ta “ new rul e ” orr e gul a t i on, butm e r e l y a c l a r i f i c a t i on of

e xi s t i ng l a w , a nd the r e f or e , “ no p r o b le m w ith th e r e tr o a c tiv e ap p lic a tio n o f th e [ S O P ] e x is t[ e d ].” I d . a t 1 2 6 0 . S e c ond, w e not e d tha tR E S P A e xpr e s s l y de l e ga t e d t o H U D the pow e rt o i s s ue i n t e rp r e t a t i o n s a n d ru l e s - - - i n c l u d i n g s t a t e m e n t s o f p o l i c y s i m i l a rt o th e 2 0 0 1 S OP

- - - th a t c a r r y th e f

u ll f o r c e o f la w , a n d th e r e f

o r e , th e 2 0 0 1 S O P w a s e n title d to C h ev ro n d ef

er en ce b y o u r c o u rt. Id . at 1 2 6 2 . W e r ejec ted th e p lain ti ff’s 4 5 arg u m en t s th atth e 2 0 0 1 S O P sh o u l d n o tb e affo rd ed C h ev ro n d eferen ce b ecau se ( 1) i tha d notbe e n i s s ue d pur s ua ntt o a f or m a l not i c e - a nd- c om m e ntpr oc e s s ; a nd (2) i tw as i ncon si st entw i th ear l i erexpres si on s of H U D ’ s posi t i on and t he st atut ory l a ngua ge . I d. Af t e rd e t e r m i n i n g th a tth e 2 0 0 1 S OP wa s e n t i t l e d t o C h e v r o n d e f e r e n c e , we he l d tha tthe rul e a nnounc e d i n the 2001 S O P ha d the e f f e c tof “ ove r rul [ i ng] the18

ho l di ng of C ul pepp erII I. ” I d. at12 63 . W e s t at ed thatthe 20 01 S O P had “e x p lic itly r e

je c t[ e d ] th e f

o u n d a tio n o f

C u lp e p p e rI I I ” a n d th a t w e w e r e b o u n d to ap p ly th e r e v is e d tw o - s te p te s t a s it h a d b e e n a r tic u la te d b y H U D in th e 2 0 0 1 S O P . I d. W e c i t e d ourde c i s i on i n S a t e l l i t e B r oa dc a s t i ng a nd C om m uni c a t i ons A s s oc i a t i on of

A m e r i c a v. O m a n, 17 F . 3d 344 ( 11th C i r . 1994) , f orthe pr opos i t i on thatw e w er e bou nd t o d ef ert o an i nt erveni ng st atut ory i nt erpret at i on thatw as cont ra ry t o o ur ea rl i erprec edent , so l on g as the agency’ s i nt erpret at i on w as base d o n a p e r m is s ib le c o n s tru c tio n o f th e s ta tu te . I d . H a vi ng a dopt e d the 2001 S O P a s the l a w i n ourc i r c ui ton the que s t i on of Y S P l i abi l i ty und erR E S P A , w e c on cl ud ed i n H ei m m erm ann t hatthe di stri ctcourt h a d ap p lie d th e “w r o n g le g a l s ta n d a r d ” in d e c id in g to c e r tif y th e c la s s . I d . a t 1 2 6 4 . S pe c i f i c a l l y , w e obs e r ve d tha tthe di s tr i c tc our tha d c e r t i f i e d the c l a s s ba s e d on the f a c t th a t “f

o re a c h c la s s m e m b e r ’s lo a n , th e Y S P w a s n o t tie d

d ir e c tly to s

p e c ific a dd i t i o n a l

servi ces prov i ded b y the brok er . ” I d. (e m ph as i s a dd ed). B ec ause that l egal st andard w as sugg es t i ve of C ul pepp erII I’ s “ exchange” anal ys i s - -- an ap p r o a c h th a t h a d s in c e b e e n r e je c te d b y th e 2 0 0 1 S O P - - - w e h e ld in He i m m e r m a n n th a tth e d i s tr i c tc o u r th a d c o m m i t t e d l e g a l e r r o r . I d . Mo r e o v e r , we i ndi c a t e d tha tthe 2001 S O P ha d m a de c l e a rtha t“ i t[ w a s ] ne c e s s a r y t o de t e r m i ne w hether c om pensabl e s ervi ce s w er e provi ded b y the brok erand w hether the t ot al19

a m ountof

br oke rc om pe ns a t i on w a s r e a s ona bl e i n the l i ghtof the c i r c um s t a nc e s of e a c h l oa n, ” a f

a c ttha tm i l i t a t e d a ga i ns tc e r t i f y i ng a c l a s s of

pl a i nt i f f s ba s e d onl y on the f a c ttha tthe i rm or t ga ge br oke r s ha d r e c e i ve d Y S P s . I d. A l tho ug h t he H ei m m erm ann cou rtdi d n otproceed t o app l y the H U D t es tas a r t i c ul a t e d i n the 2001 S O P , w e l a t e rha d oc c a s i on t o appl y tha tt e s ti n H i r s c h v. B a nk A m e r i c a C orpor a t i on, 328 F . 3d 1306 ( 11th C i r . 2003) ( pe rc ur i a m ) . L i ke the Bo r r o w e r s ’ c a s e , H i r s c h w a s a n a c t i o n a g a i n s ta mo r t g a g e l e n d e rf o rp a y i n g a Y SP t o a m ort gage brok er . Id. at13 07 . In H i rs ch the m ort gage brok erhad rece i ved $1, 750 i n f

e e s f r om the pl a i nt i f

f /bor r ow e r , a nd ha d r e c e i ve d a n a ddi t i ona l $375 Y S P fr om the l ender for del i veri ng a l oan w i th a fa vo rabl e i nt er es tra t e. Id. at 1 3 0 7 - 0 8 . In H i rs ch, w e r ei t er at ed thatH ei m m erm ann h ad adop t ed the 20 01 S O P as the l a w of

thi s c i r c ui t ; w e the n appl i e d the tw o- s t e p t e s ta s a r t i c ul a t e d i n the 2001 S O P . Id. at13 09 . F i rs t , w e f ou nd thatthe m ort gage brok erhad p rovi ded “ ac tual s e r vi c e s ” t o the H i r s c he s , s uc h a s r e c or di ng the i ri nf or m a t i on, pr e pa r i ng the m o r tg a g e ap p lic a tio n , a n a ly z in g th e irin c o m e a n d d e b t, a n d a tte n d in g th e c lo s in g . I d. H a vi ng s a t i s f

i e d the f i r s ts t e p of

the H U D t e s t , w e the n m ove d t o s t e p tw o, a nd concl ud ed thatthe t ot al com pensat i on pai d t o t he brok er–abo ut1. 4% of the l oan am ou nt–w as re as on abl e und erthe ci rc um st ance s. Id. A cc ordi ng l y, w e hel d t hat20

th e d e f e n d a n t/ l e n d e rw a s e n t i t l e d t o s u mma r y j u d g me n to n th e H i r s c h e s ’ RESPA c l a i m , s i nc e the H i r s c he s ’ ha d f a i l e d t o e s t a bl i s h tha tthe Y S P w a s i l l e ga l unde rthe H U D te s t c o n s tru in g s e c tio n 8 o f R E S P A . I d . E . T he D i stri ctC ou rtP roce edi ng s A ft erthe 20 01 S t at em entof P ol i cy I n th e w a k e o f

th e s e ap p e a ls , a n d s u b s e q u e n t to th e p a r tie s ’ d is c o v e r y in th is c a s e , I r w in f

ile d m o tio n s f

o rs u m m a r y ju d g m e n t a n d to d e c e r tif y th e c la s s . A s to Irw i n’ s m ot i on for s um m ary j ud gm ent , the di stri ctcourtfoun d t hat H e im m e r m a n n h a d m a d e c le a rth a t o u rc ir c u it h a d a d o p te d H U D ’s tw o - p r o n g te s t, a s a r t i c u l a t e d i n th e 2 0 0 1 SO P. T he c our tthe n tur ne d t o the f a c t s of the B o r r o w e r s ’ tr a n s a c tio n s in o r d e rto a s s e s s w h e th e rth e s e r v ic e s p r o v id e d b y th e ir m ort gage brok er s ( P re m i er e f or the C ul pepp er s, and H M I f or H i er s) had com pl i ed w i th H U D ’ s tw o- s t e p t e s t . A s t o s t e p one , the di s tr i c tc our tf ound tha tthe Bo r r o w e r s ’ mo r t g a g e b r o k e r s h a d p r o v i d e d c o mp e n s a b l e s e r v i c e s t o th e m, i ncl ud i ng tho se se rvi ce s l i st ed i n t he 19 99 S O P , such as col l ec t i ng fi nanci al i nf or m a t i on; a s s i s t i ng w i th the m or t ga ge appl i c a t i on pr oc e s s ; a nd m a i nt a i ni ng c o n ta c t w ith th e b o r r o w e r . M ov i ng t o st ep tw o --- w hether the t ot al com pensat i on the m ort gage brok er s re ce i ved w as “ re as on abl y r el at ed” t o t he val ue of the se rvi ce s the m ort gage brok er s perf orm ed, 64 F ed. R eg 10 08 4 --- the di stri ctcourtfoun d t hatthe B orrow er s had21

n o t p r e s e n te d a n y e v id e n c e to s h o w th a t th e c o m p e n s a tio n r e c e iv e d b y th e ir br oke r s w a s unr e a s ona bl e . T he c our tf ound tha tthe B or r ow e r s ’ a r gum e nttha tthe Y S P w as pai d t o t hei r brokers w i tho utany c on com i t antre du ct i on i n t hei r out -ofpoc ke t , up- f

r ontc os t s w a s nots uf

f i c i e nt , i n a nd of

i t s e l f , t o e s t a bl i s h tha tthe br oke r s ’ t ot a l c om pe ns a t i on w a s not“ r e a s ona bl y r e l a t e d” t o the s e r vi c e s the br oke r s pr ovi de d. T he c our tf ur the rf ound tha tthe B or r ow e r s ha d f a i l e d t o pr e s e nt a n y e v id e n c e th a t th e c o m p e n s a tio n th e s e b r o k e r s r e c e iv e d w a s u n r e a s o n a b le in c om pa r i s on t o s i m i l a rm or t ga ge l oa ns i n s i m i l a rtr a ns a c t i ons . B e c a us e the B o rro w ers h ad n o tp ro v i d ed “ an y ev i d en ce th atest ab l i sh e[d ] th e u n reaso n ab l en ess of P re m i er ’ s or H M I’ s t ot al com pensat i on i n l i gh tof m arketno rm s, ” the di stri ct c our tc onc l ude d tha tthe r e w a s no ge nui ne i s s ue of f a c ton the i s s ue of

the re as on abl enes s of the com pensat i on , and, there fore , Irw i n w as ent i t l ed t o sum m ary j udgm e nton the B or r ow e r s ’ R E S P A a c t i on. R 9- 204 a t22. A s t o t he se para t e m ot i on t o d ec er t i fy the cl as s, the di stri ctcourti nd i ca t ed th a t th e H e im m e r m a n n d e c is io n m a d e c le a rth a t Y S P p a y m e n ts to b r o k e r s s h o u ld be a s s e s s e d on a c a s e - by - c a s e ba s i s , a nd tha tthe r e f or e c l a s s c e r t i f

i c a t i on w a s not ap p r o p r ia te f

o rth e s e k in d s o f

a c tio n s , in w h ic h in d iv id u a l f a c t is s u e s p r e d o m in a te . T he courtal so re

j ec t ed the B orrow er s’ ar gu m entthatthe Y S P paym ent s w er e abov e the 1% F H A -i m po se d l i m i ton l oan o ri gi nat i on fe es , and t here fore thatthey22

w e r e p e rs e ille g a l, w ith o u t th e n e e d f o ra n in d iv id u a liz e d a s s e s s m e n t. T he court foun d t hatthi s app roac h w ou l d con tra di ctthe H U D S O P s of 199 9 and 20 01 , w hi ch m andat ed a c as e- by-c as e a nal ys i s t o d et erm i ne i f apart i cul arY S P w as i l l egal u n d e rR E S P A. A c c or di ngl y , the c our tgr a nt e d I r w i n’ s m ot i on, a nd de c e r t i f i e d the c la s s . T h is ap p e a l f

o llo w e d .

I I . DI S CUS S I ON A . D is tr ic t C o u r t’s G r a n t o f S u m m a r y J u d g m e n t in F a v o ro f I r w in W e r e vi e w a di s tr i c tc our t ’ s gr a ntof s um m a r y j udgm e ntde novo , appl y i ng the sa m e l egal st andard used by the di stri ctcourt . S ee Jo h n so n v . B d . o f R eg en t s, 263 F . 3d 1234, 1242 ( 11th C i r . 2001) ( c i t a t i on om i t t e d) . U nde rtha ts t a nda r d, s um m a r y j udgm e nti s appr opr i a t e w he r e “ the r e i s no ge nui ne i s s ue a s t o a ny m at er i al fa ctand . . . the m ov i ng party i s e nt i t l ed t o j ud gm entas a m att erof l aw . ” F ed. R . C i v. P . 56 (c ). W e have hel d t hat“ the pl ai n l angu age of R ul e 56(c) m andat es the entry of sum m ary j ud gm ent. . . agai nsta par ty w ho fa i l s t o m ake a sh o w in g su ff

icien t t o es tab li sh th e e x isten ce o f a n elem en t ess en ti al to th at p ar ty’s c a s e , a nd on w hi c h tha tpa r ty w i l l be a rthe bur de n of pr oof a ttr i a l . ’ ” J ohns on, 263 F . 3d at12 43 (quo t at i on s a nd ci t at i on om i t t ed). T he B or r ow e r s m a ke tw o a r gum e nt s c onc e r ni ng the di s tr i c tc our t ’ s de c i s i on t o g ra ntsum m ary j ud gm enti n favor of Irw i n. F i rs t , they a rgue thatthe l aw -of- the-23

c a s e doc tr i ne obl i ga t e s us t o a dhe r e t o ourpr i orrul i ngs i n thi s c a s e , de s pi t e the i nt e r ve ni ng - - - a nd c onf l i c t i ng - - - appr oa c h t a ke n by H U D i n i t s 1999 a nd 2001 S O P s . S e c o n d , th e B o r r o w e r s a r g u e th a t e v e n a s s u m in g th e H U D te s t f o rlia b ility ap p lie s to th e irc a s e , s u m m a r y ju d g m e n t s till s h o u ld n o t h a v e b e e n g r a n te d to Irw i n, si nce thei r e vi dence es t abl i shes thatthe Y S P s I rw i n p ai d w er e i l l egal un der th a t te s t. W e a d d r e s s e a c h c o n te n tio n in tu r n . 1 . L aw -o f-th e-C ase T he B or r ow e r s a r gue tha tthe l a w - of - the - c a s e doc tr i ne pr e c l ude s us f r om re consi deri ng ou r hol di ng s i n t he ea rl i erC ul pepp er c a s e s –s pe c i f i c a l l y ourhol di ng i n C ul pe ppe rI I I tha tw e ne e d nota s s e s s the “ r e a s ona bl e ne s s ” of the c om pe ns a t i on I r w i n pa i d t o the m or t ga ge br oke r s , a nd m a y f i nd a R E S P A vi ol a t i on, a bs e nta ny ev i d en ce th atth e Y S P w as di r e c t l y t i e d t o t he se rvi ce s thatthe m ort gage brok er s prov i ded. T he B orrow er s a rgue that , un der the l aw -of- the-c as e doctri ne, w e a re bo un d b y the approach thatw e t oo k i n C ul pepp erII I, no tw i thst andi ng the fa ctthat appr oa c h w a s e xpr e s s l y r e f ut e d i n the H U D 2001 S O P , a nd notw i ths t a ndi ng the fa ctthatw e l at erhel d t hatthe H U D 20 01 S O P ov errul ed C ul pepp erII I. S ee H e im m e r m a n n , 3 0 5 F .3 d a t 1 2 6 3 - 6 4 . T he l a w - of

- the - c a s e doc tr i ne hol ds tha ts ubs e que ntc our t s w i l l be “ bound by the f i ndi ngs of

f a c ta nd c onc l us i ons of

l a w m a de by the c our tof appe a l s i n a pr i or24

appe a l of the s a m e c a s e . ” W he e l e rv. C i ty of P l e a s a ntG r ove , 746 F . 2d 1437, 1440 ( 1 1 th C ir . 1 9 8 4 ) ( p e rc u r ia m ) ( c ita tio n o m itte d ) . T h e p u rp o s e o f th e d o c tr in e is to br i ng a n e nd t o l i t i ga t i on, a nd t o pr ot e c ta ga i ns tthe a gi t a t i on, orr e - l i t i ga t i on, of s e t t l e d i s s ue s . I d. ( c i t a t i ons om i tt e d) . A l though the doc tr i ne ba r s r e c ons i de r a t i on of se t t l ed i ss ues, ho w ever , w e have s t at ed thatthe l aw -of- the-c as e rul e i s notan i nexo rabl e c om m and, no r does i t“ re qu i re ri gi d adh er ence t o rul i ng s m ade a tan e a r l i e rs t e p of

a c a s e i n a l l c i r c um s t a nc e s . ” M urphy v. F D I C , 208 F . 3d 959, 966 (11t h C i r. 20 00 ) ( ci t at i on om i tt ed). R ather, w e have desc ri bed t he do ctri ne as “d ir e c t[ in g ] a c o u r t’s d is c r e tio n ” r a th e rth a n “lim it[ in g ] th e tr ib u n a l’s p o w e r .” I d . W e a r e notbound unde rthe doc tr i ne t o “ a dhe r e t o a rul i ng w i th w hi c h w e ha ve e m pha t i c a l l y a nd r e pe a t e dl y di s a gr e e d. ” I d. M or e ove r , the r e a r e thr e e not a bl e e xc e pt i ons t o the doc tr i ne . W e w i l l notbe barr ed fr om re consi deri ng the l aw -of- the-c as e “ w hen (1) a s ub se qu enttri al prod uces subst ant i al l y di ff er entevi dence (2) c on trol l i ng autho ri ty has si nce m ade a c o n tr a r y d e c is io n o f

la w ap p lic a b le to th a t is s u e o r( 3 ) th e la w - o f - th e - c a s e is c le a r ly erroneou s a nd w i l l w ork m ani fe sti nj ust i ce i f noti f notre consi dere d. ” W heel er , 74 6 F . 2d at14 40 (c i t at i on om i tt ed). T he di stri ctcourtconcl ud ed thatthe l aw -of- the-c as e doctri ne w as i nappl i c a bl e t o the pr e s e ntc a s e , a nd, c ons e que nt l y , tha ti tw a s notbound t o f ol l owIn reachingthat conclusion, wecited to Satellite Broadca sting, a casein which we 6 conclude d that we a

re not pre cluded f

rom revisitingour prior prece dent in light of a subsequent and conf licting ag ency

rulingon an issue of la

w, so longas (1) the prior prece dent left room f or the ag ency

to speak to the que stion; and (2) the intervening ag ency regulation was not arbitra ry or ca pricious. 17 F.3d at 347-48. Here, the Culpepper IIIcourt had found HUD ’s two-pa rt RES PA t e st t o b eambi guo us , th us le avingro om f

or HUD t o s tep in

and c lari fy it, a s it did wi th the 2001 SOP. Moreover , HUD’ s 2001 SOP was not arbitrar y or ca pricious. See He imm e rm ann , 3 05 F .3 d at 12 63 . A c c ording ly, a s in Sate lli teB ro a dc a sting , w eareinc lin e d to follow the intervening ag ency rulingand to af

ford it Chevron de ference . The B orrowers argue that the HUD SOP is notentitled to Chevron def erence, be cause(1) it is at odds with the plain mea ning of the statute; and (2) HUD f ailed to eng ag e in a f

ormal no tic e -a nd -c omm e nt p ro c e ss b e fo reiss uingits rulin g . Were je c te d b oth

of the searguments in Heimmerma

nn, see 305 F .3d 1261-62, and w e likewise rejec t them now. 25 the approach t o R E S P A l i abi l i ty t aken i n C ul pepp erII I. T hi s c on cl usi on w as pr ope r , f ortw o r e a s ons . F i r s t , the doc tr i ne ’ s s e c ond e xc e pt i on appl i e s , be c a us e the 2001 S O P c ons t i tut e d “ c ontr ol l i ng a uthor i ty ha s s i nc e m a de a c ontr a r y de c i s i on of l a w ap p l i c a b l e t o th a ti s s u e . ” S e e Wh e e l e r , 7 4 6 F . 2 d a t1 4 4 1 . Mo r e o v e r , th e l a wof - the - c a s e doc tr i ne i s i nappl i c a bl e be c a us e w e a r e “ c onvi nc e d tha tthe pr i or d e c is io n [ C u lp e p p e rI I I ] is c le a r ly e r r o n e o u s a n d w o u ld w o r k m a n if e s t in ju s tic e ” if i tw er e bl i nd l y f

ol l ow ed. S ee M urph y, 20 8 F . 3d at96 6 (ci t at i on s om i t t ed). A s to th e f

ir s t p o in t, th e 2 0 0 1 H U D S O P c o n s titu te d “c o n tr o llin g a u th o r ity [ th a t] h a s s in c e m a d e a c o n tr a r y d e c is io n o f la w ap p lic a b le ” to th e B o r r o w e r s ’ c a s e . Wh e e l e r , 7 4 6 F . 2 d a t1 4 4 1 . I n He i m m e r m a n n , we s t a t e d th a tth e 2 0 0 1 HU D S OP w a s a n a ge nc y rul i ng tha tc a r r i e d the f ul l f or c e of l a w , tha ti tw a s ba s e d on a pe r m i s s i bl e c ons truc t i on of the s t a tut e , a nd tha ti tw a s e nt i t l e d t o C he vr on d e f e r e n c e b y o u rc o u r t . S e e 3 0 5 F . 3 d a t1 2 0 5 . Mo r e o v e r , i n He i m m e r m a n n , we 626

a dopt e d the 2001 S O P a s the l a w of ourc i r c ui t . S e e i d. a t1263; s e e a l s o H i r s c h, 3 2 8 F . 3 d at1 3 0 9 . B ecau se th e 2 0 0 1 S O P co n st i tu t es “ co n tro l l i n g au th o ri ty” ca rryi ng the force of l aw , w e our bo un d t o fol l ow i t , ra ther than o ur ea rl i er , cont ra ry ho l di ng i n C ul pepp erII I. A cont ra ry re sul tw ou l d “ w ed thi s c i rc ui tt o [an e a r l i e r ] de c i s i on, w hi l e a l l othe rc i r c ui t s a nd the S upr e m e C our tw oul d be bound unde rC he vr on t o de f

e rt o the [ a ge nc y ] rul e . ” S e e S a t e l l i t e B r oa dc a s t i ng, 17 F . 3d a t 3 4 8 . M o reo v er, w e are co n v i n ced th atth e th i rd ex cep t i o n t o th e l aw -o f-th e-case d o c tr in e is ap p lic a b le

– th a t is , th a t th e ap p r o a c h to R E S P A lia b ility ta k e n in C u lp e p p e rI I I w a s “c le a r ly e r r o n e o u s ,” s u c h th a t c o n tin u in g to ap p ly it “w o u ld w o r k m a n if

e s t in ju s tic e .” S e e M u rp h y , 2 0 8 F .3 d a t 9 6 6 . W e in tim a te d a s m u c h in H e i m m e r m a nn, w he r e w e s t a t e d tha tthe di s tr i c tc our t , by f ol l ow i ng the s t a nda r d of l i a bi l i ty of

C ul pe ppe rI I I , ha d “ appl i e d the w r ong l egal s tandar d. ” 305 F . 3d at 1264 ( e m pha s i s a dde d) . W e ha ve r e pe a t e dl y s t a t e d tha tthe 2001 S O P ha d the e f f e c to f o v e r ru l i n g Cu l p e p p e rI I I , th e r e b y s u g g e s t i n g th a tth e ap p r o a c h t o RESPA l i a bi l i ty t a ke n i n C ul pe ppe rI I I w a s c l e a r l y e r r one ous . S e e i d. ; s e e a l s o G l ove rv. S t a nda r d F e de r a l B a nk, 283 F . 3d 953, 964 n. 9, 966 ( 8th C i r . 2002) ( r e j e c t i ng the anal ys i s of C ul pepp erII I a nd qu eryi ng w hether the ca se re t ai ns any r es i du al27

vi a bi l i ty i n the E l e ve nth C i r c ui ti n the w a ke of H U D ’ s 2001 S O P ) . F ortha tr e a s on, w e f in d th a t c o n tin u in g to f

o llo w C u lp e p p e rI I I w o u ld w o r k m a n if e s t in ju s tic e . B e c a u s e w e c o n c lu d e th a t th e ap p r o a c h to R E S P A lia b ility ta k e n in C ul pepp erII I w as cl ea rl y e rr on eous and t hatcont i nu i ng t o fol l ow thatapproach w ou l d w ork m ani fe sti nj ust i ce , w e a gree w i th t he di stri ctcourtthatthe l aw -of- thec a s e doc tr i ne i s i nappl i c a bl e t o the B or r ow e r s ’ c a s e . W e a r e notbound unde rthe la w - o f - th e - c a s e to c o n tin u e to f o llo w th e R E S P A lia b ility s ta n d a r d s e t f o r th in C u lp e p p e rI I I ; r a th e r , th e H U D 2 0 0 1 S O P te s t ap p lie s . W e n o w tu r n to th a t te s t in o r d e rto d e te r m in e if

I r w in w a s e n title d to s u m m a r y ju d g m e n t a s a m a tte ro f la w . 2 . W h e th e rth e Bo r r o w e r s ’ Y SPs Co n s t i tu t e I l l e g a l Pa y me n t s U n d e rRESPA T he B orrow er s c on t end t hateven un der the H U D tw o-st ep t es t , the di stri ct co u rtn ev erth el ess erred i n g ran t i n g su m m ary j u d g m en ti n fav o r o f Irw i n , b ecau se the Y S P s I r w i n pa i d t o the B or r ow e r s ’ m or t ga ge br oke r s w e r e unr e a s ona bl e a nd ille g a l u n d e rth e H U D te s t. H U D ’ s t es tfor w hether aY S P t o a m ort gage brok erconst i tut es an i l l egal paym entun der R E S P A i nv ol ves tw o st eps. F i rs t , w e a sk w hether the brok er pe r f or m e d “ a c tua l s e r vi c e s ” i n the c our s e of a r r a ngi ng the m or t ga ge tr a ns a c t i on, th a t is , w h e th e rh e p e r f

o r m e d a n y o f

th e s e r v ic e s m e n tio n e d in H U D ’s 1 9 9 9 S O P . H i r s c h, 328 F . 3d a t1308- 09. I f the a ns w e rt o the f

i r s tque s t i on i s no, the n a28

R E S P A v io la tio n h a s b e e n e s ta b lis h e d . G lo v e r , 2 8 3 F .3 d a t 9 6 5 . I f th e a n s w e rto the f i r s tque s t i on i s y e s , w e the n pr oc e e d t o a s k w he the rthe t ot a l c om pe ns a t i on w as re as on abl e i n l i gh tof the t ot al arra y of s ervi ce s thatthe brok erperf orm ed. S ee H i r s c h, 328 F . 3d a t1309. I n unde r t a ki ng thi s a na l y s i s , w e do nota s k w he the rthe s e r vi c e s the br oke rpe r f orm e d w e r e l i nke d t o the Y S P i n pa r t i c ul a r ; r a the r , w e l ook a t“ a l l of the s e r vi c e s pe r f

or m e d a nd [ ] e va l ua t e the m i n l i ghtof a l l the c om pe ns a t i on ( notj us tthe Y S P i n i s ol a t i on) the m or t ga ge br oke rr e c e i ve d f r om a ny s our c e . ” I d. a t1309 n. 8; 66 F e d. R e g. 53053; s e e a l s o G l ove r , 283 F . 3d a t965 (s t at i ng thatst ep tw o i nv ol ves a n ass es sm entof “ w hether a ny partof the t ot al paym ent , i ncl ud i ng the Y S P , prov es t o b e e xces si ve, and, thu s, an un l aw ful re fe rr al f e e ” ) . H er e, i ti s und i sput ed thatthe B orrow er s’ m ort gage brok er s provi ded t hem w i th th e k i n d s o f serv i ces l i st ed i n H U D ’ s 1 9 9 9 S O P , i n cl u d i n g , am o n g o th ers, t ak i n g d o w n th ei r i n fo rm at i o n an d fi l l i n g o u tth ei r m o rt g ag e ap p l i cat i o n s; a na l y z i ng the i ri nc om e a nd de bta nd pr e - qua l i f y i ng the m t o de t e r m i ne the m a xi m um m or t ga ge s tha tthe y c oul d a f f or d; c ol l e c t i ng the i rf

i na nc i a l i nf

or m a t i on; and p ar t i ci pat i ng i n t hei r l oan cl osi ng s. S ee 64 F ed. R eg. 10 08 5. T hese ar eTh eB or ro wers arguethat noc omp e ns a ble“ serv ic e ”wa s e ver p e rf or me d b y the ir 7 mor tg a g ebroke rs . In s uppo rt of thi s c ontenti on , th e y

c iteto a 19 96 int e rrog ator

y in which Irw in stated that it paid a YSP to the Culpeppers’ broker, Premiere, “ for the right to ser vice the loa

n.” R6-149, Exh. 16 at 6. The B orrowers argue that this admission shows that no “service ” wa s perf ormed that re dounded to the Culpepper s’ bene fit. Rather, they contend that this admission shows that the YSP was nothing morethan a pa y ment by Irwin to purcha se the Culpepper s’ loan, and that th e re fo rethepa

y ment f ails on thefirs t step o f t

heHUD l ia

bil ity te st. We rejec t this argument. HUD ha s stated that the YSP is not t o be viewe d in isolation, but as part of

the total compensation to the broker. 66 F ed. Reg . 53053. HUD ha s also made clea r that it “does not view thename of the pay ment”-- - that is, how the par ties ref er to a pieceof the compensation ---“ as the a ppropriateissue under RESPA.” I d. at 53054. Rather, the transac tion’s leg ality

must be assessed according to the totality of the c ircumstance s. In light of that guidanc e , th efac t th at Irw in s tate d in an interrog ator

y that it wa s p aying“ fo r t

heri ght to s erv i ce th e [ C u lp ep p er s ’] l o an ” d o es n o t , s t an di n g al o n e, es t ab l i s hth atth e C u lp ep p er s ’ m o rt gage broke r did n ot p e rf

or m any c omp e ns a

bleserv ic e s th at in

ure d tothe ir

bene fi t. 29 com pensabl e s ervi ce s und erR E S P A , and t hu s the fi rs tst ep of the H U D tw o-part t e s ti s s a t i s f

i e d. 7 W e the n m us ta s k w he the rthe t ot a l c om pe ns a t i on pa i d t o the m or t ga ge b ro k ers w as u n reaso n ab l e i n l i g h to f th e serv i ces th atth ey p erfo rm ed . In th e case of the C ul pe ppe r s , P r e m i e r e ’ s c om pe ns a t i on c ons i s t e d of a l oa n or i gi na t i on f

e e of $7 60 . 50 , as w el l as a Y S P of $1 , 26 3. 21 -- - abo ut1. 67 5% of the l oan am ou nt-- - b r in g in g P r e m ie r e ’s to ta l c o m p e n s a tio n to $ 2 ,0 2 3 .7 1 . In th e c as e o f H iers , H M I’s c om pe ns a t i on c ons i s t e d of a n or i gi na t i on f

e e of $1, 544, a l oa n di s c ountof $14. 64, and a Y S P of $4 , 53 8. 87 -- - app roxi m at el y 2. 87 5% of the t ot al l oan am ou nt-- - b r in g in g its to ta l c o m p e n s a tio n to $ 6 ,0 9 7 .5 1 . T h e B o rro w ers d o n o tp resen tan y ev i d en ce d em o n strat i n g th atth ese co m p en sat i o n am o u n t s w ere u n reaso n ab l e i n l i g h to f th e t o t al array o f serv i ces30

pe r f or m e d. I ns t e a d, the y a r gue tha tthe f a c ttha tthe Y S P pa y m e ntdi d noti n a ny w a y r e d u c e th e iru p - f

r o n t c lo s in g c o s ts e s ta b lis h e s th a t th e y w e r e u n r e a s o n a b le un der R E S P A . T hi s c on t ent i on fa i l s, for tw o rea sons. F i rs t , as di sc usse d p rev i o u sl y, i n d eci d i n g th e q u est i o n o f reaso n ab l en ess w e are i n stru ct ed t o assess the “ t ot a l c om pe ns a t i on” the br oke rr e c e i ve d, w hi c h “ i nc l ude s di r e c tor i gi na t i on fe es and o ther f

ee s pai d b y the bo rr ow er , i nd i re ctfe es , i ncl ud i ng tho se thatar e deri ve fr om the i nt er es tra t e pai d b y the bo rr ow er , or a c om bi nat i on [there of] . . . . ” 66 F e d. R e g. 53055. S e c ond, a s the di s tr i c tc our tc onc l ude d, the f a c ttha tthe B or r ow e r s ’ up- f

r ontc l os i ng c os t s w e r e notr e duc e d i s nots uf f i c i e nt , s t a ndi ng a l one , t o e s t a bl i s h tha tthe br oke r s ’ c om pe ns a t i on w a s unr e a s ona bl e i n l i ghtof the se rvi ce s thatthey per form ed. T hi s i s e spec i al l y s o w here the se rvi ce s they pe r f or m e d othe r w i s e appe a rt o ha ve a i de d a nd be ne f i t t e d the B or r ow e r s i n c l os i ng th e irm o r tg a g e tr a n s a c tio n s . N o r are w e co n v i n ced b y th e B o rro w ers’ co n t en t i o n th atth e Y S P w as p er se un re as on abl e bec ause un der f eder al re gu l at i on s abrok er ’ s c om pensat i on i s l i m i t ed t o an o ri gi nat i on fe e of 1% . S ee 24 C . F . R . § 2 03 . 27 (a )( 2)(i ). O ther c i rc ui t s that ha ve c ons i de r e d tha ta r gum e ntha ve r e j e c t e d i t , c onc l udi ng tha tthe l i m i t a t i on on m ort gage brok erfe es se tforth i n 2 4 C . F . R . § 2 03 . 27 (a )( 2)(i ) onl y app l i es t o fee s

“ di re ct l y c o lle c te d [ f

r o m th e m o r tg a g o r ], n o t in d ir e c tly c ol l e c t e d [ f r om the31

le n d e r ].” S e e Bju s tr o m v . T ru s t O n e M o r tg a g e C o rp ., 3 2 2 F .3 d 1 2 0 1 , 1 2 0 5 ( 9 th C ir . 2 0 0 3 ) . B e c a u s e w e a g r e e w ith th e N in th C ir c u it th a t 2 4 C .F .R . § 2 0 3 . 2 7 ( a ) ( 2 ) ( i ) d o e s n o tp r e c l u d e a mo r t g a g e b r o k e rf r o m c o l l e c t i n g a Y SP i nd i re ct l y f

rom a m ort gage l ender, w e c anno tac ce ptthe B orrow er s’ bl anket c o n te n tio n th a t any co m p en sat i o n i n ex cess o f th e 1 % o ri g i n at i o n fee i s p er se u n reaso n ab l e u n d er R E S P A . S u ch an ap p ro ach w o u l d fl o u tH U D ’ s case-b y-case i n q u i ry t o Y S P p aym en t s. I n s u m m a r y , th e B o r r o w e r s b e a rth e b u r d e n o f d e m o n s tr a tin g , w ith s p e c if ic evi dence, thatthe t ot al re m un er at i on thatthei r brokers re ce i ved w as un re as on abl e, s e e H i r s c h, 328 F . 3d a t1309, i n l i ghtof both obj e c t i ve m a r ke ts t a nda r ds a nd the su b j ect i v e fact s o f th ei r m o rt g ag e tran sact i o n s. 6 6 F ed . R eg . 5 3 0 5 5 . T h i s i s a bu rden they have fa i l ed t o sat i sf y. B ec ause nei ther of the B orrow er s has subm i t t ed e v id e n c e s u f

f ic ie n t to d e m o n s tr a te th a t th e to ta l c o m p e n s a tio n p a id to th e ir resp ect i v e b ro k ers w as so m eh o w “ u n reaso n ab l e” u n d er H U D ’ s R E S P A an al ysi s, s um m a r y j udgm e ntw a s appr opr i a t e f orI r w i n. S e e , e . g. , H i r s c h, 328 F . 3d a t1309 ( a f f i r m i ng gr a ntof

s um m a r y j udgm e ntf

orthe l e nde rw he r e the pl a i nt i f f s di d not p r e s e n ta n y e v i d e n c e th a tth e t o t a l a mo u n tp a i d t o th e i rb r o k e r , i n c l u d i n g a Y SP, w a s unr e a s ona bl e i n l i ghtof the s e r vi c e s the br oke rpe r f or m e d) ; Bj us tr om , 322 F. 3 d a t1 2 0 8 ( a f

f i r mi n g g r a n to f

s u mma r y j u d g me n tt o th e l e n d e ro n a RESPA32

ac ti o n w h er e th e p lain ti ff “o ff er ed n o ev id en ce to p ro v e th at h erm o rtg ag e b ro k er ’s s e r v ic e s w e r e n ’t w o r th w h a t w a s p a id ” ) ; S c h u e tz , 2 9 2 F .3 d a t 1 0 1 4 ( s a m e ) . W e d is c e r n n o e r r o rin th e d is tr ic t c o u r t’s o r d e r . B . D i stri ctC o u rt ’ s O rd er D ecert i fyi n g th e C l ass T he B orrow er s s epar at el y c hal l enge the di stri ctcourt ’ s dec i si on t o d ec er t i fy th e c la s s , a d e c is io n th a t w a s r e a c h e d in c o n ju n c tio n w ith th e c o u r t’s d e c is io n to grantsum m ary j ud gm entfor I rw i n. U nd erR ul e 23(c)( 1)(C ) of the F eder al R ul es of C i vi l P r oc e dur e , a di s tr i c tc our tm a y a l t e rora m e nd i t s c e r t i f i c a t i on or de ra ta ny t i m e bef ore r enderi ng a dec i si on on the m er i t s. W e r evi ew the prop ri ety of a di s tr i c tc our t ’ s de c i s i on t o de c e r t i f y a c l a s s f

ora bus e of

di s c r e t i on. S e e S i ke s v. T el el i ne, Inc. , 28 1 F . 3d 13 50 , 13 59 (11t h C i r. 20 02 ); se e a l so F orehand v . F l a. S t a t e H os p. a tC ha tt a hooc he e , 89 F . 3d 1562, 1566 ( 11th C i r . 1996) ( “ Q ue s t i ons concerni ng cl as s c er t i fi ca t i on ar e l ef tt o t he soun d d i sc re t i on of the di stri ctcourt . ”) ( c i t a t i on om i tt e d) . “ A di s tr i c tc our ta bus e s i t s di s c r e t i on i f . . . i tappl i e s the w r ong l e ga l s t a nda r d . . . orm a ke s f i ndi ngs of

f a c ttha ta r e c l e a r l y e r r one ous . ” S i ke s , 281 F . 3d at13 59 (c i t at i on s a nd qu ot at i on om i t t ed). I n th is c a s e , th e d is tr ic t c o u r t c o n c lu d e d th a t H U D ’s S O P s h a d r e p e a te d ly ur ge d a c a s e - by - c a s e a na l y s i s t o the l e ga l i ty of a c om pe ns a t or y pa y m e ntt o a brok erun der R E S P A . A ft erconcl ud i ng -- - i n l i gh tof the H U D S O P s a s w el l asIt should also be pointed out that the district court’s order certifying theclass in 1999 8 re lie d h e avily

on the“ e xch ang e ”a

pp ro a c h o f t

hee arl ier C ulp epp e r c a se s. Se e , e .g ., R2- 59 at 8 (stating , in cer

tifying theclass, that the YSP couldn’t be a pay ment for “ service s” under section 8(c) , beca use the YSP was “not tied in any fashion to the amount of service s paid either to the Culpeppers or to the de fenda nt”). This approach w as subsequently reje cted by

the HUD 2001. Moreover, in Heimmerma nn, we rever sed a c ertification of a cla ss that had been based on similar leg al re asoning , characterizing it as the “wrongleg al standard.” See H eimmermann, 305 F .3d at 33 H ei m m erm an n --- th atsu ch an i n d i v i d u al i zed , case-b y-case assessm en tm ad e cl ass c e r t i f i c a t i on i nappr opr i a t e f

ors e c t i on 8 R E S P A c l a i m s , the c our tde c e r t i f i e d the cl as s. T he B orrow er s c on t end t hatthi s w as i n err or. T he B or r ow e r s ’ c a s e w a s or i gi na l l y c e r t i f i e d a s a c l a s s a c t i on i n F e brua r y of 1 9 9 9 , p ri o r t o b o th th e 1 9 9 9 an d th e 2 0 0 1 S O P s. A tth att i m e, th e p u t at i v e cl ass had b ee n g ener al l y def

i ned as “ al l pers on s” w ho ob t ai ned a feder al l y i nsured m ort gage “ thatw as fund ed by Irw i n M ort gage C orpo ra t i on w here i n t he brok erw as pa i d a l oa n or i gi na t i on f e e of 1% orm or e a nd w he r e i n I r w i n pa i d a [ Y S P ] t o the brok er . ” R 2-47 at1. In ar gu i ng for c l as s c er t i fi ca t i on , the B orrow er s had focuse d on the general nature of thei r c l ai m s, st at i ng that“ ea ch of the cl as s m em bers had fa l l en vi ct i m t o t he sa m e i m prop ercond uctas the nam ed P l ai nt i ff s–bei ng sol d an i nfl at ed i nt er es tra t e l oan i n o rdert o fun d Irw i n M ort gage C orpo ra t i on ’ s [ ] i l l egal re fe rr al fe e t o t he cl as s m em bers ’ m ort gage brok er s. ” I d. at2. T he di stri ctcourt a c c e pt e d thi s c ha r a c t e r i z a t i on of the B or r ow e r s ’ c a s e , s t a t i ng i n i t s c e r t i f i c a t i on or de rtha tc l a s s c e r t i f

i c a t i on w a s pr ope rbe c a us e the B or r ow e r s ’ “ pr oof w i l l , of ne c e s s i ty , be of

age ne r a l na tur e . . . a nd w i l l notbe f a c ts pe c i f

i c . ” R 2- 59 a t9. 81264. 34

T he 2001 S O P , how e ve r , m a de c l e a rtha tthe l e ga l i ty of a Y S P pa y m e ntt o a m ort gage brok eri s t o b e a ss es se d i n l i gh tof the part i cul arfa ct s a nd ci rc um st ance s of the bor r ow e r ’ s tr a ns a c t i on; the a ge nc y rul i ng r e pe a t e dl y e m pha s i z e d the i ndi vi dua l i z e d na tur e of the i nqui r y unde rR E S P A . S e e , e . g. , 66 F e d. R e g. 53054 ( s t a t i ng tha t“ the l e ga l i ty of a ny [ Y S P ] c a n onl y be e va l ua t e d i n the c ont e xtof the t es tH U D es t abl i shed and t he spec i fi c f ac tual ci rc um st ance s app l i cabl e t o eac h tra nsac t i on i n w hi ch a [ Y S P ] i s use d”); i d. at53 05 5 (“ [I ] ti s nec es sa ry t o l oo k at ea ch tra nsac t i on i nd i vi du al l y, i ncl ud i ng exam i ni ng al l of the go od s or f ac i l i t i es p ro v id ed o r s er v ices p er fo rm ed b y th e b ro k erin th e tra n sa ctio n ”) . H U D ’s re com m endat i on thatea ch m ort gage tra nsac t i on be as se ss ed on a i nd i vi du al , ca se b y - c a s e b a s is c e r ta in ly c a lls in to q u e s tio n th e d is tr ic t c o u r t’s o r ig in a l d e c is io n to c e r t i f y the B or r ow e r s ’ c l a s s , ba s e d on i t s pr e s uppos i t i on tha tthe B or r ow e r s ’ a c t i on w o u ld “b e o f

a g e n e r a l n a tu r e . . . a n d [ w o u ld ] n o t b e f a c t s p e c if

ic .” R 2 - 5 9 a t 9 . M o r e o v e r , in H e im m e r m a n n w e r e v e r s e d a c la s s c e r tif ic a tio n , b a s e d , in p a r t, on the f a c tthe 2001 S O P ha d m a de c l e a rtha t“ i t[ w a s ] ne c e s s a r y t o de t e r m i ne w hether c om pensabl e s ervi ce s w er e provi ded b y the brok erand w hether the t ot al a m ountof

br oke rc om pe ns a t i on w a s r e a s ona bl e i n the l i ghtof the c i r c um s t a nc e s of ea ch l oan. ” 305 F . 3d at12 64 . W e c on cl ud ed thatthi s i nt erpret at i on m i l i t at ed35

agai nstce rt i fy i ng a c l as s bas ed on l y on t he fa ctthatal l cl as s m em bers ’ brok er s had recei v ed Y S P s. Id . In ad d i t i o n , o u r si st er ci rcu i t s h av e co n cl u d ed th atcl ass c e r t i f i c a t i on i s i nappr opr i a t e i n s e c t i on 8 R E S P A c a s e s , i n l i ghtof H U D ’ s 2001 S O P e x p r e s s ly u r g in g a n in d iv id u a liz e d a s s e s s m e n t o f c o m p e n s a to r y p a y m e n ts to b r o k e r s . S e e , e .g ., G lo v e r , 2 8 3 F .3 d a t 9 6 5 ( c o n c lu d in g th a t c la s s c e r tif ic a tio n is im p ra ctical in R E S P A ac ti o n s in v o lv in g Y S P p ay m en ts to b ro k er s, sin ce H U D ’s S O P m a d e c le a rth a t th e s e tr a n s a c tio n s a r e “c a s e s p e c if ic ” a n d th a t d is tr ic t c o u r ts are t o u n d ert ak e a “ l o an sp eci fi c i n q u i ry”); S ch u et z, 2 9 2 F . 3 d at1 0 1 4 (cl ass c e r t i f i c a t i on i nappr opr i a t e be c a us e w he the rthe Y S P i s pr ohi bi t e d de pe nds on the se rvi ce s provi ded and the com pensat i on pai d “ i n any part i cul arca se ”) ; se e al so O ’ S ul l i van v . C ou nt ry w i de H om e L oans, Inc. , 31 9 F . 3d 73 2, 74 1-42 (5th C i r. 2003) ( f i ndi ng c l a s s c e r t i f

i c a t i on i nappr opr i a t e f

ora s e c t i on 8( b) R E S P A a c t i on beca use, “ [c ] on si st ent l y w i th t he H U D re as on abl e r el at i on shi p t es t , i nd i vi du al i ze d fact fi n d i n g w i l l b e req u i red fo r each tran sact i o n ” an d st at i n g th atth e “ i n q u i ry m u st be pe r f or m e d on a tr a ns a c t i on- by - tr a ns a c t i on ba s i s , be c a us e a s i ngl e f i ndi ng of l i abi l i ty bas ed on an un re as on abl e r el at i on shi p b etw ee n g oo ds and servi ce s does notne c e s s i t a t e the c onc l us i on tha ts uc h unr e a s ona bl e ne s s e xi s t s on a c l a s s w i de b a s is ” ) .36

In l i gh tof these deci si on s, w e c anno tconcl ud e thatthe di stri ctcourtabused i t s di s c r e t i on i n f

i ndi ng tha tc l a s s c e r t i f

i c a t i on w a s i m pr ope ra nd i n the r e by d e c e r tif y in g th e c la s s . U n d e rR u le 2 3 ( c ) ( 1 ) o f th e F e d e r a l R u le s o f

C iv il P r o c e d u r e , d is tr ic t c o u r ts a r e f r e e to r e v is it th e in itia l d e c is io n to c e r tif y a c la s s , in l i ghtof s ubs e que ntde ve l opm e nt s i n the c a s e . S e e G e n. T e l . C o. of S w . F a l c on, 45 7 U . S . 14 7, 16 0, 10 2 S . C t . 23 64 , 23 72 (198 2). H er e, the di stri ctcourt co n cl u d ed th atth e B o rro w ers’ act i o n sh o u l d n o th av e b een cert i fi ed as a cl ass a c t i on i n the f

i r s tpl a c e , i n l i ghtof

both the s ubs e que ntH U D pr onounc e m e nton R E S P A l i a b i l i ty a s we l l a s o u rd e c i s i o n i n He i m m e r m a n n a d o p t i n g th e 2 0 0 1 S OP as the l aw of thi s c i rc ui t . T hatconcl usi on w as no ti n err or, and t here fore w e a ff i rm th e d is tr ic t c o u r t’s o r d e rd e c e r tif y in g th e c la s s . I I I . CONCL US I ON T he B orrow er s have app ea l ed the di stri ctcourt ’ s ordergrant i ng sum m ary ju d g m en t i n fa v o r o f I rw in o n th eir s ec ti o n 8 R E S P A claim , an d th e d istrict co u rt’s s e p a r a te o r d e rd e c e r tif

y in g th e c la s s in th e irc a s e . U p o n r e v ie w , w e c o n c lu d e th a t, ba s e d on the H U D t e s tf orR E S P A l i a bi l i ty s e tf or th i n the 2001 S O P , the B o r r o w e r s h a v e f

a ile d to p r o v id e e v id e n c e th a t th e to ta l c o m p e n s a tio n I r w in p a id t o t hei r m ort gage brok er s w as un re as on abl e i n l i gh tof the se rvi ce s thatthey p ro v i d ed . T h erefo re, Irw i n w as en t i t l ed t o su m m ary j u d g m en to n th e B o rro w ers’37

R E S P A c la im . I n a d d itio n , w e f in d th a t in d iv id u a l is s u e s o f f a c t p r e d o m in a te in th e s e ty p e s o f

R E S P A a c tio n s , a n d th e r e f o r e , w e c o n c lu d e th a t th e d is tr ic t c o u r t d id n o t a b u s e its d is c r e tio n in d e c e r tif y in g th e c la s s in th e B o r r o w e r s ’ c a s e . A cc ordi ng l y, w e AF F I RM .