02-2285 Krzalic v. Republic Title Co.

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“On the plaintiffs’ and HUD’s view, section 8(b) forbids a lender or closing agent to reprice any of the charges that it has incurred and is passing on to the borrower. This would make sense if RESPA were a public-utility or other rate-regulating statute, but it is not. The statute places no ceiling on the amount that a closing agent can charge for its services. At the closing on the Krzalics’ real estate transaction, Republic charged them a closing fee of $315 plus various expenses that included the $50 recording fee. Had Republic charged the Krzalics only the actual recording fee of $36, it could have raised its closing fee to $329 and be in the identical economic position that it was in with the repricing of the fee. The plaintiffs and HUD argue that Republic would have been reluctant to do this because then the plaintiffs might have taken their business to a closing agent that charged a lower closing fee. But all that borrowers care about is the bottom line-which in this case was approximately $165,000-and that would not have been affected by which line contained the $14; the sum of $315 and $50 is identical to the sum of $329 and $36. If borrowers are as price conscious as the Krzalics claim to be (and more power to them), then their lawyers (for the Krzalics were represented by counsel at the closing), who know what the county recorder charges for routine services, will shop for closing agents who neither reprice such charges nor make compensating upward adjustments in their closing fees.

“Nothing is more common than for professionals to reprice the incidental charges that they incur on behalf of their clients. Law firms, for example, typically reprice their copying expenses in their bills to their clients. The client is not hurt because he can easily find out what those expenses actually were, and so it is with the government’s charges for routine services in connection with real estate transactions-the charges are not secret. If the real estate settlements industry is competitive, a member of the industry cannot increase the market price for its services by how it allocates its overhead among the different components of its invoices. What is more, if the effect of the plaintiffs’ suit were to induce closing agents like Republic to defer levying the charge for recording until it did the recording and thus knew the exact fee, it would be more rather than less difficult for consumers to comparison shop among closing agents.”

Affirmed.

Appeal from the United States District Court for the Northern District of Illinois, Kocoras, J., Posner, J.