                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 02-2285
NEDZAD KRZALIC and DANIJELA KRZALIC,
                                                Plaintiffs-Appellants,
                                  v.


REPUBLIC TITLE CO.,
                                                  Defendant-Appellee.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
           No. 01 C 9979—Charles P. Kocoras, Chief Judge.
                          ____________
   ARGUED NOVEMBER 1, 2002—DECIDED DECEMBER 26, 2002
                          ____________


  Before BAUER, POSNER, and EASTERBROOK, Circuit Judges.
  POSNER, Circuit Judge. Section 8(b) of the Real Estate
Settlement Procedures Act, 12 U.S.C. § 2607(b), provides
that “no person shall give and no person shall accept any
portion, split, or percentage of any charge made or re-
ceived for the rendering of a real estate settlement service
in connection with a transaction involving a federally re-
lated mortgage loan other than for services actually per-
formed.” The plaintiffs in this class action suit contend
that the defendant, the closing agent in their purchase of
a home, charged them $50 for recording their mortgage
yet paid the county recorder only $36. The plaintiffs (who
2                                                  No. 02-2285

conceded in the district court, but forgot in this court, that
they lack standing to challenge a second alleged over-
charge, made by the sellers of the house for the release
of the previous mortgage) claim that the $14 difference
pocketed by the defendant represented the receipt of a
portion of a charge other than for a service actually per-
formed, and so violated the statutory provision that we
quoted.
  In Echevarria v. Chicago Title & Trust Co., 256 F.3d 623, 626-
28 (7th Cir. 2001), we held, as have other courts, see
Boulware v. Crossland Mortgage Corp., 291 F.3d 261, 265-68
(4th Cir. 2002); Willis v. Quality Mortgage USA, Inc., 5 F.
Supp. 2d 1306, 1309 (M.D. Ala. 1998), that section 8(b) is
an anti-kickback provision. There was no kickback in
that case, and there is none here. But in response to our
decision, the Department of Housing and Urban Develop-
ment, which Congress has authorized to “prescribe such
regulations, to make such interpretations, and to grant
such reasonable exemptions for classes of transactions,
as may be necessary to achieve the purposes of” the Act,
12 U.S.C. § 2617(a), issued a policy statement in which,
clarifying its previous views on the subject, which had
been ambiguous, see, e.g., 24 C.F.R. 3500.14(c); 57 Fed. Reg.
49600, 49605 (Nov. 2, 1992); Echevarria v. Chicago Title
& Trust Co., supra, 256 F.3d at 627-28, it stated its disagree-
ment with our decision and made clear its view that sec-
tion 8(b) is not “limited to situations where at least two
persons split or share an unearned fee.” HUD, Real
Estate Settlement Procedures Act Statement of Policy 2001-1,
66 Fed. Reg. 53052, 53057 (Oct. 18, 2001). Any repricing
of charges, the statement contends, is unlawful. The pol-
icy statement was not adopted in a notice and com-
ment rulemaking proceeding or with any other delibera-
tive formalities, and the district judge, refusing on
that ground to give the statement Chevron deference and
No. 02-2285                                                   3

declare Echevarria defunct, granted the defendant’s mo-
tion to dismiss the suit for failure to state a claim. HUD
has filed an amicus brief in this court in support of the
plaintiffs’ appeal.
  When a statute administered by a federal agency is
unclear and the agency is authorized to interpret it, the
agency’s interpretation, unless unreasonable, may bind
a reviewing court in accordance with Chevron U.S.A.
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,
842-44 (1984). Ordinarily issues of statutory interpreta-
tion are treated as pure issues of law, and no deference
is given the interpretation adopted by executive or other
officials. But Chevron, in effect equating statutory inter-
pretation to policymaking (cf. Hans Kelsen, Pure Theory
of Law 351-353 (Max Knight trans. 1967)), hands over
(with certain qualifications) interpretive responsibility to the
officials responsible for making policy judgments, when
the ordinary interpretive tools used by courts, such as
textual interpretation, do not work well.
   By taking this position the Court appears to have shifted
power from the legislative to the executive branch, and
to the so-called “independent” administrative agencies
as well, by limiting judicial authority to preserve the
deal struck by contending interest groups in the original
legislation. For while in principle Congress can step in
and curb a straying agency, the practice is often differ-
ent because of the obstacles to legislating that are built
into the federal legislative process, including bicameralism
and the Presidential veto. William N. Eskridge, Jr., Dynam-
ic Statutory Interpretation 164-67 (1994); Jonathan T. Molot,
“Reexamining Marbury in the Administrative State: A
Structural and Institutional Defense of Judicial Power
Over Statutory Interpretation,” 96 Nw. U.L. Rev. 1239, 1282
(2002); see also William N. Eskridge, Jr. & John Ferejohn,
4                                              No. 02-2285

“The Article I, Section 7 Game,” 80 Geo. L.J. 523, 538-43
(1992). These obstacles give agencies a degree of running
room.
  Small-d democrats might question Chevron’s shift of
legislative power to the bureaucracy. But realists, while
acknowledging the point and also that it is a fiction to
suppose Chevron itself an interpretation of the stat-
utes to which it applies or that the exercise of power
by appointed officials is democratic merely because it is
authorized by elected officials, will applaud the Su-
preme Court’s recognition that the interpretation of an
ambiguous statute is an exercise in policy formulation
rather than in reading.
  Adams Fruit Co. v. Barrett, 494 U.S. 638, 649-50 (1990),
might seem to cast doubt on Chevron’s applicability to the
Real Estate Settlement Procedures Act, however, because
the Court said that “Congress has expressly established
the Judiciary and not the Department of Labor as the
adjudicator of private rights of action arising under the
statute [a statute for the protection of farm workers]. A
precondition to deference under Chevron is a congression-
al delegation of administrative authority . . . . No such
delegation regarding AWPA’s enforcement provisions is
evident in the statute. Rather, Congress established an
enforcement scheme independent of the Executive and
provided aggrieved farmworkers with direct recourse to
federal court where their rights under the statute are
violated.” RESPA too is enforced by private actions
rather than by judicial or administrative proceedings insti-
tuted by HUD. But whereas the farm workers’ statute had
not delegated to the Department of Labor authority to fill
gaps in the statute, RESPA explicitly delegates such au-
thority to the Department of Housing and Urban Develop-
ment, in 12 U.S.C. § 2617(a), which we quoted earlier. Two
No. 02-2285                                                 5

of the three courts to have considered the question have
concluded, albeit without discussion of Adams Fruit, that at
least some HUD interpretations of RESPA are within the
scope of Chevron. Heimmermann v. First Union Mortgage
Corp., 305 F.3d 1257, 1261-62 (11th Cir. 2002); Schuetz
v. Banc One Mortgage Corp., 292 F.3d 1004, 1012 (9th Cir.
2002).
  The third court, in Glover v. Standard Federal Bank, 283
F.3d 953, 961-63 (8th Cir. 2002), reached a similar re-
sult by the old-fashioned route, mapped in Skidmore v.
Swift & Co., 323 U.S. 134, 140 (1944), of granting the de-
gree of deference that an agency’s decision invites by
virtue of the cogency of its reasoning in relation to the
nature of the issue. The more technical the issue is, the less
guidance the statute provides to its correct resolution, the
more sensible-seeming the agency’s decision, and the
more deliberative and empirical the procedures employed
in arriving at that decision, the greater the deference that
a reviewing court will give it.
  Barnhart v. Walton, 122 S. Ct. 1265, 1272 (2002), the Su-
preme Court’s most recent decision interpreting Chevron,
suggests a merger between Chevron deference and Skid-
more’s and Glover’s approach of varying the deference that
agency decisions receive in accordance with the circum-
stances: “the interstitial nature of the legal question, the
related expertise of the Agency, the importance of the
question to administration of the statute, the complexity
of that administration, and the careful consideration the
Agency has given the question over a long period of time
all indicate that Chevron provides the appropriate legal lens
through which to view the legality of the Agency inter-
pretation here at issue.” Or in the words of Professor Pierce,
“legislative rules and formal adjudications are always
entitled to Chevron deference, while less formal pronounce-
ments like interpretative rules and informal adjudications
6                                                No. 02-2285

may or may not be entitled to Chevron deference. The
deference due a less formal pronouncement seems to de-
pend on the results of judicial application of an apparent-
ly open-ended list of factors that arguably qualify as
‘other indication[s] of a comparable congressional intent’ to
give a particular type of agency pronouncement the force
of law.” Richard J. Pierce, Jr., Administrative Law Treatise
§ 3.5, pp. 6-7 (4th ed. Supp. 2003).
   We need not penetrate more deeply into this thicket; for
even if HUD’s interpretations of RESPA are entitled to
Chevron deference, that deference is not total and as it
happens section 8(b) of RESPA will not bear, as a matter
of straightforward judicial interpretation (for if such inter-
pretation dissipates any possible statutory ambiguity and
fills any possible gap in the statute, Chevron deference is
not owed), the meaning that HUD wants to give it. Repub-
lic Title did not “accept any portion, split, or percentage
of any charge.” No one agreed to divide a receipt with
Republic. The statutory language describes a situation
in which A charges B (the borrower) a fee of some sort,
collects it, and then either splits it with C or gives C a
portion or percentage (other than 50 percent—the situation
that the statutory term “split” most naturally describes)
of it. A might be a lawyer, and C a closing agent like
Republic Title, and A might charge a legal fee to B and
kick back a share of it to C for recommending to the bor-
rower that he use A’s services. That would be a form of
commercial bribery and is the target of section 8(b). Repub-
lic, however, received no part of a fee charged by some-
one else. The plaintiffs’ beef is that the county recorder
did not charge $50 to record their mortgage; and so he
could not have divided it with Republic. Recall, too, that
the statute forbids the giving as well as the receiving of
any portion, split, or percentage. On the plaintiffs’ under-
standing, they themselves violated the statute because
No. 02-2285                                                  7

they gave Republic a portion of the fee charged by the
county recorder!
  In United States v. Gannon, 684 F.2d 433, 435-36 (7th
Cir. 1981) (en banc), the strongest case for HUD and the
plaintiffs but not strong enough, a county clerk charged
more than the stated fee and kept the difference. He was
accepting in his personal capacity a portion of the fee that
he was imposing in his official capacity. It was as if he
had kicked back the difference to Republic.
  Usually when a statutory provision is clear on its face
the court stops there, in order to preserve language as an
effective medium of communication from legislatures to
courts. If judges won’t defer to clear statutory language,
legislators will have difficulty imparting a stable mean-
ing to the statutes they enact. But if the clear language,
when read in the context of the statute as a whole or of
the commercial or other real-world (as opposed to law-
world or word-world) activity that the statute is regulat-
ing, points to an unreasonable result, courts do not
consider themselves bound by “plain meaning,” but have
recourse to other interpretive tools in an effort to
make sense of the statute. E.g., Public Citizen v. U.S. Dept.
of Justice, 491 U.S. 440, 453-55 (1989); Green v. Bock Laundry
Machine Co., 490 U.S. 504, 527 (1989) (Scalia, J., concurring);
AM Int’l, Inc. v. Graphic Management Associates, Inc., 44
F.3d 572, 577 (7th Cir. 1995); Veronica M. Dougherty, “Ab-
surdity and the Limits of Literalism: Defining the Absurd
Result Principle in Statutory Interpretation,” 44 Am. U.L.
Rev. 127 (1994). They do not want to insult the legislature
by attributing absurdities to it.
  In this case, however, context reinforces the implications
of the statutory language. On the plaintiffs’ and HUD’s
view, section 8(b) forbids a lender or closing agent to re-
price any of the charges that it has incurred and is passing
8                                              No. 02-2285

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 plain-
tiffs 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 ser-
vices, will shop for closing agents who neither reprice
such charges nor make compensating upward adjust-
ments in their closing fees.
  Nothing is more common than for professionals to re-
price 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 gov-
ernment’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 mem-
ber of the industry cannot increase the market price for
No. 02-2285                                                    9

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.
  Maybe, though, there is some hanky-panky going on
here that we are missing by assuming away costs of infor-
mation. When asked at argument why his client reprices
the recording fee, Republic’s lawyer answered that the
precise fee is not known until the documents are re-
corded, and that occurs after the closing. True, but it’s easy
enough to estimate within pennies. A visit to the Cook
County recorder’s Web site reveals that the fee for record-
ing a mortgage is $23 for the first two pages and $2 for
each additional page plus 50 cents for service by return
mail; so for the eight-page mortgage involved here, the
total fee could readily be estimated at $35.50, which is
well short of the $50 that Republic charged. And anyway
Republic does not refund any overcharge that emerges
when the precise fee is learned. Still, to repeat an earlier
point, we have difficulty seeing what difference it can
make to the consumer where the $14 “overcharge” ap-
pears on the closing statement. And if there is a fraud
here, there are plenty of legal remedies, though none so
far as we know under RESPA.
  But the most important point is that if the practice of
repricing incidental charges is a fraud or market failure
or abuse of some sort, still it is not a market failure that sec-
tion 8(b) can reasonably be thought to address, and so a
reading of the section that leaves the failure uncured is not
a reading that creates a loophole. If RESPA were a price-
control statute a loophole would be opened if the firms
10                                               No. 02-2285

subject to the statute were allowed to mark up cost items in
their bills to whatever height they wanted. It is not a price-
control statute.
  There is not enough play in the statutory joints to allow
HUD to impose its own “interpretation” under the aegis
of Chevron. But there is a further point. If an agency is
to assume the judicial prerogative of statutory interpre-
tation that Chevron bestowed upon it, it must use, not
necessarily formal adjudicative procedures or its closest
nonadjudicative counterpart, which is notice and com-
ment rulemaking (as in Sierra Club v. EPA, 311 F.3d 853,
858 (7th Cir. 2002)), but, still, something more formal,
more deliberate, than a simple announcement. See Barn-
hart v. Walton, supra, 122 S. Ct. at 1271-72; United States
v. Mead Corp., 533 U.S. 218, 229-31 (2001). A simple an-
nouncement is too far removed from the process by which
courts interpret statutes to earn deference. A simple an-
nouncement is all we have here. One fine day the policy
statement simply appeared in the Federal Register. No
public process preceded it—or at least the part of it
that concerns section 8(b), for the policy statement deals
with other matters as well.
  The qualification is important. In 1999 HUD had issued
a policy statement concerning yield-spread premiums
(a method of spreading the normal up-front closing costs
over the life of the mortgage) after meeting with govern-
ment representatives plus a broad range of consumer and
industry groups. 64 Fed. Reg. 10080, 10084 (Mar. 1, 1999).
And both that statement and a portion of the 2001-1 state-
ment (the one on which HUD and the plaintiffs rely here)
that further addressed the issue of yield-spread premi-
ums contain a full discussion of that issue. But the dis-
cussion in the 2001-1 statement of the unearned-fees (i.e.,
section 8(b)) issue is perfunctory. It expresses disagree-
ment with our decision in Echevarria but gives no reason
No. 02-2285                                               11

except that HUD has always regarded such fees as forbid-
den by the statute, though previously it had failed to
make this clear. No evidence or interpretive methodology
is mentioned; no abuse pointed to that might justify the
contorted interpretation urged by HUD. Its amicus brief
alarmingly warns that repricing is “putting home owner-
ship beyond the reach of many Americans,” that “HUD is
currently investigating over 100 complaints,” and that if
we don’t adopt its interpretation we will be permitting
“unscrupulous providers to inflate settlement charges
without limit.” None of this appears in the policy statement,
perhaps because it is silly; a $14 overcharge (if that is
how it should be viewed) in a $165,000 purchase is not
going to make the difference between owning and renting.
It is no surprise that Heimmermann, Schuetz, and Glover,
the three decisions we cited earlier that defer to HUD
interpretations, all dealt with the part of the 2000-1 state-
ment that concerns yield-spread premiums.
                                                 AFFIRMED.




  EASTERBROOK, Circuit Judge, concurring in part and
concurring in the judgment. I join my colleagues’ opinion
except for those portions that discuss Chevron U.S.A. Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984). The Real Estate Settlement Practices Act is enforced
entirely through private litigation, and Adams Fruit Co. v.
Barrett, 494 U.S. 638, 649-50 (1990), holds that, when this
is true, the view of a federal agency achieves binding
force only when incorporated into legislative regulations
12                                              No. 02-2285

issued under delegated power. The Department of Hous-
ing and Urban Development has the power to prescribe
regulations, see 12 U.S.C. §2617(a), but elected instead
to announce its interpretation of the statute. It issued a
broadside and hoped that courts would kowtow. Yet in
private litigation Chevron does not give any force to a
declaration unaccompanied by the formalities of rulemak-
ing or administrative adjudication. See also United States
v. Mead Corp., 533 U.S. 218 (2001). Otherwise the Admin-
istrative Procedure Act, which specifies how delegated
power is to be exercised, would be a dead letter. When
an agency doles out public funds and is a party to the
suit, less formal steps may have legal effects, see Barnhart
v. Walton, 535 U.S. 212 (2002), but ours is not such a situa-
tion. If the agency abjures the APA’s procedures for making
decisions, courts owe the administrative interpretation
careful attention, see Skidmore v. Swift & Co., 323 U.S. 134
(1944), but nothing more. “Interpretations contained in
policy statements . . . which lack the force of law do not
warrant Chevron-style deference.” Christensen v. Harris
County, 529 U.S. 576, 587 (2000); see also EEOC v. Arabian
American Oil Co., 499 U.S. 244, 256-58 (1991). I do not
perceive in Walton any “merger” (slip op. 5) between
Chevron and Skidmore, which Mead took such pains to
distinguish. HUD’s interpretation is on the Skidmore side
of the line.
  Surprisingly, two circuits have treated HUD’s Real Estate
Settlement Procedures Act Statement of Policy 2001-1, 66
Fed. Reg. 53052 (Oct. 18, 2001), as equivalent to a regula-
tion. See Heimmermann v. First Union Mortgage Corp., 305
F.3d 1257, 1261 (11th Cir. 2002); Schuetz v. Banc One Mort-
gage Corp., 292 F.3d 1004, 1012 (9th Cir. 2002). Yet nei-
ther opinion discusses the significance of Adams Fruit or
Christensen in relation to the agency’s disregard of those
procedures that the APA establishes for the exercise of reg-
No. 02-2285                                               13

ulatory authority. Heimmermann, Schuetz, and a related de-
cision, Glover v. Standard Federal Bank, 283 F.3d 953, 963-65
(8th Cir. 2002), concern the treatment of yield-spread pre-
miums under the RESPA, and I have nothing to say about
the legal status of that practice. As Glover observes, HUD
has issued regulations about yield-spread premiums, and
the policy statement may be understood as an interpreta-
tion of those regulations, which do have binding status.
But I am confident that Heimmermann and Schuetz erred
in thinking that the Real Estate Settlement Procedures
Act Statement of Policy 2001-1 is itself conclusive under
Chevron, as opposed to informative (and potentially per-
suasive).
  Boulware v. Crossland Mortgage Corp., 291 F.3d 261 (4th
Cir. 2002), holds, and all members of this panel agree, that
HUD’s interpretation of §8(b), 12 U.S.C. §2607(b), finds
no purchase in the statutory text, is essentially unrea-
soned, and is neither informative nor persuasive. Sec-
tion 8 is an anti-kickback rule, not an anti-markup rule. It
does not forbid profit and could not do so, given the clos-
ing agent's unfettered ability to set a price for the pack-
age of services it offers. See Mercado v. Calumet Federal
Savings & Loan Ass'n, 763 F.2d 269 (7th Cir. 1985). It would
make neither linguistic nor economic sense to describe
the difference between wholesale and retail price in the
auto business as a “portion, split, or percentage of any
charge” because the dealer must pay the manufacturer for
inventory. Just so in real estate closings: The Recorder of
Deeds’ fee is Republic Title’s wholesale price for a ser-
vice; Republic’s retail price is higher. Republic bears the
costs of transferring the deed to the Recorder; it must pay
the salary of employees who process the papers, and
maybe it pays a messenger service too. The markup cov-
ers these and other costs, such as the bank’s fees on the
checks written to the Recorder, the cost of capital used to
14                                              No. 02-2285

run the business, and the risk that some deeds may be so
lengthy that the Recorder’s fees will top the charge. Wheth-
er or not the $50 exceeds all costs associated with getting
the deed filed, nothing has been “split” or kicked back.
Services were furnished as described: the deed was filed,
and the closing agent performed (and bore the cost of)
all the ministerial acts essential to accomplish filing. By
announcing that the RESPA forbids markups over whole-
sale price, HUD has gone off on a tangent. It might as
well have said that the salary paid to the closing agent’s
staff, or the rent paid to the landlord for space used in the
closing, is an illegal “split” of funds received from the
customer.
   All of this makes Chevron by the by, so it is surprising
that my colleagues go out of their way to suggest that its
approach is undemocratic and that statutory interpreta-
tion is just policymaking by another name. In what sense
could it be “undemocratic” to have statutory ambiguities
resolved, and gaps filled, by elected officials (and those
who serve at their pleasure) rather than by judges whose
tenure insulates them from the popular will? What is
more, textualists are among Chevron’s supporters, an
odd position if the decision adopts the view that legal
texts are empty vessels to be filled by judges (or admin-
istrators). All Chevron does is acknowledge that deci-
sionmaking authority is shared among branches of gov-
ernment; it does not imply that the only sensible inter-
pretive stance is pragmatic rather than textualist. Nor does
Chevron surreptitiously transfer authority from the leg-
islative to the executive branch of government. Agencies’
interpretive role stems from delegation of authority, not
raw ambiguity. That’s one reason why Chevron does not
require courts to implement “interpretations” that agencies
announce without following the APA’s requirements for
No. 02-2285                                               15

rulemaking: following forms is a condition attached to
the delegation.
   Interpretation differs fundamentally from regulation.
Judges do not apply Chevron to the Attorney General’s
interpretation of the Sherman Antitrust Act, whether in
public or in private litigation, although the antitrust stat-
utes are notoriously open-ended. Nor do courts accept
under Chevron the prosecutor’s interpretation of ambig-
uous criminal statutes such as RICO. Chevron itself says
that delegation is the key; Adams Fruit and Mead drive
the point home. When the holder of a delegated power
wields that authority, the legislative plan has been ful-
filled, not frustrated. Congress can choose to delegate, or
not, statute-by-statute or through framework laws such
as the APA; it could undo Chevron across the board if the
doctrine functioned as kryptonite to its enactments. All
that matters today, however, is that when the executive
branch does not employ regulatory power delegated by
the legislative branch, resolution of ambiguities in private
litigation belongs to the judicial branch.

A true Copy:
       Teste:

                          _____________________________
                          Clerk of the United States Court of
                            Appeals for the Seventh Circuit




                   USCA-02-C-0072—12-26-02
