Veterans United Home Loans and its real estate brokerage affiliate are pushing back against an amended class-action lawsuit. The companies are seeking dismissal of the complaint, which accuses them of operating an illegal kickback scheme.
The case centers on allegations that the lender and its brokerage violated the Real Estate Settlement Procedures Act (RESPA). RESPA prohibits kickbacks or referral fees between settlement service providers, and the plaintiffs claim the affiliated business arrangement constituted just such a violation.
Legal experts note that dismissal motions in RESPA class actions face a high bar, as courts have increasingly allowed these cases to proceed to discovery. However, the defendant's argument typically hinges on whether the arrangement falls within RESPA's safe harbor provisions for affiliated business arrangements.
If the motion succeeds, it could strengthen the legal shield around lender-broker partnerships that many large mortgage firms use. If denied, the case could proceed to costly discovery, potentially exposing internal financial arrangements between Veterans United and its brokerage.
Some industry observers caution that the lawsuit's outcome may depend on whether the plaintiffs can demonstrate that the referrals were not merely standard business practice but actual kickbacks disguised as legitimate transactions. Veterans United has not commented beyond its court filing.