                                                                     [PUBLISH]


               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT            FILED
                         ________________________ U.S. COURT OF APPEALS
                                                           ELEVENTH CIRCUIT
                                No. 08-11245               NOVEMBER 23, 2010
                          ________________________             JOHN LEY
                                                                CLERK
                       D. C. Docket No. 07-00478-CV-CG

KEIDRICK C. WOOTEN,
MITZI D. WOOTEN,
BILLY R. BUCKHAULTS,
CHERYL A. BUCKHAULTS,
on behalf of themselves and
all others similarly situated,


                                                           Plaintiffs-Appellants,

                                       versus

QUICKEN LOANS, INC.,

                                                            Defendant-Appellee.


                          ________________________

                  Appeal from the United States District Court
                     for the Southern District of Alabama
                        _________________________

                                 (November 23, 2010)
Before TJOFLAT and EDMONDSON, Circuit Judges, and RYSKAMP,* District
Judge.

TJOFLAT, Circuit Judge:

       Section 8(b) of the Real Estate Settlement Procedures Act (“RESPA”)

provides:

       (b) Splitting charges. No person shall give and no person shall accept
       any portion, split, or percentage of any charge made or received for
       the rendering of a real estate settlement service in connection with a
       transaction involving a federally related mortgage loan other than for
       services actually performed.

12 U.S.C. § 2607(b). The principal question this appeal presents is whether, in

connection with a residential mortgage loan, charging a loan discount

payment—otherwise known as “points” or “discount points”—to provide a

specific, below-market interest rate constitutes the “rendering of a real estate

settlement service” within the meaning of § 2607(b). The district court, dismissing

the appellant borrowers’ complaint for failure to state a violation of § 2607(b), held

that the borrowers’ payment of such points was not for the “rendering of a real

estate settlement service.” We agree, and therefore affirm the court’s ruling.

                                              I.

       This is a class action brought against Quicken Loans, Inc. (“Quicken”) by



       *
         Honorable Kenneth L. Ryskamp, United States District Judge, Southern District of
Florida, sitting by designation.

                                               2
two sets of borrowers: Keidrick C. Wooten and Mitzi D. Wooten, his wife, and

Billy R. Buckhaults and his wife, Cheryl A. Buckhaults.1 These plaintiffs

purportedly represent everyone who obtained a residential mortgage loan from

Quicken and was charged points, but did not receive the specific, below-market

interest rate Quicken promised. The Wootens’ and Buckhaults’ transactions

differed; thus, we set them out separately.

       Before doing so, however, we should point out that plaintiffs’ counsel, in

drafting the complaint in this case, failed to attach to the complaint the notes and

mortgages the Wootens and Buckhaults executed. Defense counsel attached the

notes to Quicken’s motion to dismiss the complaint, and the district court, over

plaintiffs’ objection, made the instruments part of the complaint,2 relying on them

in granting Quicken’s motion. The complaint also alleges that Quicken furnished

the respective borrowers the mortgage-closing statement required by the U.S.

Department of Housing and Urban Development, “Settlement Statement (HUD-1)”

(“HUD-1”), and that the HUD-1, on line 802, indicated that Quicken was charging

the borrowers a “Loan Discount” percentage, or points, for the specific interest rate

       1
          Quicken is a Michigan corporation with its principal place of business in Michigan.
The Wootens and Buckhaults are Alabama residents. They invoked the district court’s federal
question jurisdiction, 28 U.S.C. § 1331, to prosecute their RESPA claims, and the court’s
supplemental jurisdiction, 28 U.S.C. § 1367, to prosecute their state law claims for breach of
contract.
       2
           Plaintiffs do not challenge the court’s ruling in this appeal.

                                                   3
stated in the mortgage note. As was the case with respect to the notes and

mortgages, the HUD-1s presented to the borrowers were not part of the complaint.

Nor were they attached to Quicken’s motion to dismiss, or referred to by the

district court in its dispositive order. To the end that the facts surrounding the loan

closings may be presented in full, we consider as part of the complaint both the

HUD-1s the borrowers received and, as the district court did, the notes they

executed.3

                                                A.

       On July 18, 2006, the Wootens entered into a residential mortgage

transaction with Quicken. They executed an “Adjustable Rate Note” for $132,250,

payable in 30 years, at an “initial fixed interest rate” of 5.875% per annum.4

“Quicken charged the Wootens a loan discount fee of $5,951.00, an amount equal

to 4.5% of their loan amount. The Wootens did not negotiate for a buy-down of

the interest rate nor did they receive a lower interest rate in return for paying


       3
          We take judicial notice of the HUD-1s in effect when the loans closed. The 2006
HUD-1 can be found at 24 C.F.R. Pt. 3500 App. A (2006), available at
http://edocket.access.gpo.gov/cfr_2006/aprqtr/pdf/24cfr3500.21.pdf. The 2007 HUD-1 can be
found at 24 C.F.R. Pt. 3500 App. A (2007), available at
http://edocket.access.gpo.gov/cfr_2007/aprqtr/pdf/24cfr3500.21.pdf. Because we are unsure
which HUD-1 form the borrowers received from Quicken, we refer to the 2007 version in this
opinion. The parts of that HUD-1 relevant to the case here are lines 800, “Items Payable In
Connection With Loan,” and 802, “Loan Discount              %.”
       4
           The terms of the Wootens’ note appear in the note attached to Quicken’s motion to
dismiss.

                                                4
points.” Compl. ¶ 8. Nonetheless, as indicated on line 802 of the HUD-1 that

Quicken gave them at closing,5 id. ¶ 16, they paid a “Loan Discount” of 4.5% for

the interest rate stated in their mortgage note, 5.875%.6

                                                 B.

       On July 3, 2006, the Buckhaults entered into a residential mortgage

transaction with Quicken. The Buckhaults executed a “Note” for $140,000,

payable in 15 years, at a fixed interest rate of 6.500% per annum.7 “Quicken

charged the Buckhaults a loan discount fee of $2,100.00, an amount equal to 1.5%

of their loan amount. The Buckhaults did not negotiate for a buy-down of the

interest rate nor did they receive a lower interest rate in return for paying points.”

Id. ¶ 9. Nonetheless, as indicated on line 802 of the HUD-1 that Quicken gave

them at closing, id. ¶ 16, they paid points, a “Loan Discount” of 1.5% for the




       5
         The complaint implies, but does not affirmatively state, that “a lower interest rate”
means an interest rate lower than the going-market rate, i.e., the rate a mortgage lender, like
Quicken, would charge similarly situated home buyers. The complaint does not identify the
going-market rate.
       6
          The complaint does not reveal the interest rate the Wootens agreed to pay for the loan.
The complaint suggests that 5.875% was the rate charged for loans made to home buyers whose
financial stability was similar to the Wootens’. Thus, Quicken did not need to charge points for
granting the Wootens a mortgage at 5.875%.
       7
           The terms of the Buckhaults’ notes appear in the notes attached to Quicken’s motion to
dismiss.

                                                 5
interest rate stated in their mortgage note, 6.500%.8

       The Buckhaults and Quicken entered into a second residential mortgage

transaction on April 6, 2007. Id. ¶ 10. The Buckhaults executed an “Interest First

Note” for $142,800, payable in 30 years, at a fixed interest rate of 6.125% per

annum.9 “This time Quicken charged the Buckhaults a loan discount fee of

$1,963.50, an amount equal to 1.375% of their loan amount. The Buckhaults did

not negotiate for a buy-down of the interest rate nor did they receive a lower

interest rate in return for paying points.” Id. Nonetheless, as indicated on line 802

of the HUD-1 that Quicken gave them at closing, id. ¶ 16, they paid a “Loan

Discount” of 1.375% for the interest rate stated in their mortgage note, 6.125%.10

                                                II.

       The Wootens and Buckhaults instituted this class action on July 2, 2007.

Their complaint contained two counts, both founded on the facts recited in parts

       8
          As in the Wootens’ case, the complaint reveals neither the interest rate the Buckhaults
agreed to pay for the loan nor the going-market rate. The complaint, however, suggests that
6.500% was the rate charged for loans made to home buyers whose financial stability was
similar to the Buckhaults’. Thus, Quicken did not need to charge points for granting the
Buckhaults a mortgage at 6.500%.
       9
        The note attached to Quicken’s motion to dismiss is described as an “Interest First
Note” and reveals the terms indicated in the text.
       10
            As in the case of the Buckhaults’ July 3, 2006 loan, the complaint does not reveal the
interest rate the Buckhaults agreed to pay for the loan. The complaint suggests that Quicken did
not need to charge points for granting the Buckhaults a mortgage at 6.125%, i.e., that 6.125%
was the rate charged for loans made to home buyers whose financial stability was similar to the
Buckhaults’ at the time the loans were made.

                                                 6
I.A and I.B. Count I, brought under § 8(b) of RESPA, 12 U.S.C. § 2607(b) and 24

C.F.R. § 3500.14(c), alleged that Quicken charged the Wootens and Buckhaults a

“‘Loan Discount’ fee for which no interest rate discount was given or bargained for

. . . .” Id. ¶ 1. Specifically,

       The section 802 charges listed on the HUD-1s were imposed for
       services that were not bona fide, not rendered, not paid or for nominal,
       unreasonable or duplicative services for which no fees were earned
       and for which no fees should have been imposed, all in violation of
       RESPA at 12 U.S.C. § 2607, and RESPA’s implementing regulations,
       Regulation X, at 24 C.F.R. § 3500.14.11

Id. ¶ 33. Stripped to its essentials, Count I alleges that the agreements the

Wootens and Buckhaults made with Quicken did not call for a discounted interest

rate and thus did not require the payment of a loan discount, or points. They

nonetheless paid the points, receiving nothing in return.




       11
            Section 3500.14(c) states:

       No split of charges except for actual services performed. No person shall give
       and no person shall accept any portion, split, or percentage of any charge made or
       received for the rendering of a settlement service in connection with a transaction
       involving a federally related mortgage loan other than for services actually
       performed. A charge by a person for which no or nominal services are performed
       or for which duplicative fees are charged is an unearned fee and violates this
       section. The source of the payment does not determine whether or not a service is
       compensable. Nor may the prohibitions of this Part be avoided by creating an
       arrangement wherein the purchaser of services splits the fee.

24 C.F.R. § 3500.14(c). Note that the first sentence of § 3500.14(c) adopts verbatim the
language of 28 U.S.C. § 2607(b), except that it omits the words “real estate” between
“rendering” and “service.”

                                                7
       Count II, claims for breach of contract,12 alleged as follows: “Quicken and

Plaintiffs entered into . . . contract[s] and . . . Quicken[] . . . charg[ed] Plaintiffs for

points [but did] not actually provid[e] a[n] interest rate discount or alternatively . . .

charge[d] for points when no agreement was made for points.” Id. ¶ 19.c. Quicken

“breached [the] contract[s] by charging Plaintiffs a loan discount fee without

actually providing a lower interest rate or other reasonable service in return.” Id.

¶ 38. The gist of Count II is that the Wootens and Buckhaults paid Quicken for a

discounted interest rate but did not receive one, or, alternatively, Quicken charged

the Wootens and Buckhaults points they were not supposed to pay.

       Having laid out the facts surrounding the mortgage loan transactions as

described in the complaint, we turn now, in part III, to the sufficiency of Count I to

state a case for relief under § 8(b) of RESPA and Regulation X. In part IV, we

consider whether Count II states a case for breach of contract.

                                               III.

       The district court concluded that points are not a “settlement service,” within

the meaning of § 8(b) of RESPA, but a sum paid to provide an interest rate lower

than the interest rate the market required.13 The court thus treated the points as part

       12
          We assume that Count II was brought under Alabama law because the agreements
between the Wootens and Buckhaults and Quicken were made in Alabama.
       13
          The district court refused plaintiffs’ suggestion that, in determining whether Quicken
violated § 8(b) of RESPA, it defer to a 2004 audit report prepared by HUD’s inspector general.

                                                8
of the interest Quicken charged for the loans.

       For a mortgage lender’s charging of points to violate § 8(b), the points must

be charged or received “for the rendering of a real estate settlement service in

connection with a transaction involving a federally related mortgage loan.”

Accordingly, in reviewing the district court’s dismissal of Count I, we begin with

the question of whether points represent a charge for rendering a “settlement

service.” If they do not, we proceed to the question of whether the points Quicken

charged constituted payment for settlement services rather than for providing the

borrowers with below-market interest rates.

                                                A.

       We begin our analysis with the text of RESPA, noting that we are

necessarily limited in our interpretation of “settlement service” by the statutory

definition and the regulations interpreting it. See, e.g., Schwarz v. City of Treasure

Island, 544 F.3d 1201, 1214 (11th Cir. 2008) (contemplating the meaning of

“residence” in the context of defining “dwelling,” beginning with the definitions

provided by the applicable statute and HUD regulations and, finding nothing


The report stated that a mortgage lender that charges points but does not provide the borrower
with a below-market interest rate violates § 2607(b). The court noted that the inspector general is
only subject to limited supervision, and that the audit report was not issued after notice and
comment or any other agency deliberation. Therefore, the report was entitled to no deference
under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.
Ct. 2778, 81 L. Ed. 2d 694 (1984). See Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.
Ct. 1655, 1662–63, 146 L. Ed. 2d 621 (2000). We agree.

                                                 9
applicable, proceeding to the common or ordinary meaning of the term). RESPA

defines a “settlement service” as “any service provided in connection with a real

estate settlement.” 12 U.S.C. § 2602(3). Examples of qualifying services include:

      (1) Origination of a federally related mortgage loan (including, but not
      limited to, the taking of loan applications, loan processing, and the
      underwriting and funding of such loans); (2) Rendering of services by a
      mortgage broker (including counseling, taking of applications, obtaining
      verifications and appraisals, and other loan processing and origination
      services, and communicating with the borrower and lender); (3) Provision of
      any services related to the origination, processing or funding of a federally
      related mortgage loan; (4) Provision of title services, including title searches,
      title examinations, abstract preparation, insurability determinations, and the
      issuance of title commitments and title insurance policies; (5) Rendering of
      services by an attorney; (6) Preparation of documents, including
      notarization, delivery, and recordation; (7) Rendering of credit reports and
      appraisals; (8) Rendering of inspections, including inspections required by
      applicable law or any inspections required by the sales contract or mortgage
      documents prior to transfer of title; (9) Conducting of settlement by a
      settlement agent and any related services; (10) Provision of services
      involving mortgage insurance; (11) Provision of services involving hazard,
      flood, or other casualty insurance or homeowner’s warranties; (12) Provision
      of services involving mortgage life, disability, or similar insurance designed
      to pay a mortgage loan upon disability or death of a borrower, but only if
      such insurance is required by the lender as a condition of the loan; (13)
      Provision of services involving real property taxes or any other assessments
      or charges on the real property; (14) Rendering of services by a real estate
      agent or real estate broker; and (15) Provision of any other services for
      which a settlement service provider requires a borrower or seller to pay.

24 C.F.R. § 3500.2. In addition, both “the provision of title certificates” and “the

handling of the processing, and closing or settlement” qualify. 12 U.S.C.

§ 2602(3).



                                          10
      “Settlement” is defined as “the process of executing legally binding

documents regarding a lien on property that is subject to a federally related

mortgage loan.” 24 C.F.R. § 3500.2.

      While the non-exhaustive, but illustrative, list of examples provides some

guidance, neither the statutory text nor the regulations define what is meant by

“service.” Failing a statutory or regulatory definition, we must turn to its common

and ordinary meaning. Schwarz, 544 F.3d at 1214 (citing Nat’l Coal Ass’n v.

Chater, 81 F.3d 1077, 1081 (11th Cir. 1996)).

      Black’s Law Dictionary defines “service” as “the act of doing something

useful for a person or company, usu[ally] for a fee.” Black’s Law Dictionary 1491

(9th ed. 2009). The definition in Webster’s Third New International Dictionary is

substantially the same: “action or use that furthers some end or purpose: conduct or

performance that assists or benefits someone or something: deeds useful or

instrumental toward some object.” Webster’s Third New Int’l Dictionary 2075

(1993); see also Webster’s New World Dictionary 1226 (3d ed. 1988) (defining

“service” as “an act giving assistance or advantage to another,” including “friendly

help; also, professional aid or attention”). As these sources suggest, the service

referred to by RESPA includes any act undertaken to bring about the execution of a

mortgage and note. Cf. United States v. Graham Mortg. Corp., 740 F.2d 414, 418



                                          11
(6th Cir. 1984) (“[T]he common thread running among the listed services is that

each is an ancillary or peripheral service that . . . is not directly related to the

closing of a real estate sale covered by RESPA.”).14 That definition does not

include the act of negotiating advance interest terms such as points.

       We can find nothing in the legislative history surrounding Congress’s 1992

amendments to RESPA, which were enacted specifically in response to Graham, to

suggest a broader definition of “settlement service.” Prior to the amendments, the

definition of “settlement service” ended with the phrase “services rendered by a

real estate agent or broker.” Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294,

1298–99 (11th Cir. 2002). After Graham held that the making of mortgage loans

was not a “settlement service,” Congress responded by adding the phrase “the

origination of federally related mortgage loan (including, but not limited to, the

taking of loan applications, loan processing, and the underwriting and funding of

loans).” Pub. L. No. 102-550, § 908, 106 Stat. 3672, 3873–74 (1992). House

Report 102-760 explained the reason behind the change:



       14
           In Graham, a criminal indictment charged a mortgage company, its individual officers,
and a real estate developer with giving and accepting kickbacks in violation of § 2607(a).
United States v. Graham Mortg. Corp., 740 F.2d 414, 416 (6th Cir. 1984). Interpreting a
previous definition of settlement services, the Sixth Circuit held that the lender’s provision of
interim financing at a reduced interest rate without the payment of points in exchange for the
developer’s agreement to refer all its business to the lender was not a “settlement service”; in
other words, “the making of a mortgage loan is [not] a settlement service for purposes of
RESPA.” Id. at 418–19.

                                               12
      This mortgage origination issue is before the Committee because of
      the Graham decision. United States v. Graham Mortgage Corp., 740
      F.2d 414 (6th Cir. 1984). In that case, Graham Mortgage Corporation
      was accused of violating the anti-kickback provisions of section 8(a)
      of RESPA by charging a developer fewer “points” on mortgage loans
      than it customarily charged in exchange for the developer's referral to
      GMC of other mortgage loan customers. Although the Sixth Circuit
      rejected the government’s argument by reasoning that the statutory
      definition of settlement services did not clearly extend to mortgage
      lending procedures, the Committee believes that mortgage lending
      must be included as a settlement service to preserve the effectiveness
      of RESPA as a consumer protection statute.

H.R. Rep. No. 102-760, at 158 (1992), reprinted in 1992 U.S.C.C.A.N. 3281, 3438.

The amendments do not alter our analysis.

      As a preliminary matter, we dispense with any comparison to Graham. That

case involved a loan origination fee, “a fee charged by a lender to cover the

administrative costs of making a loan.” Black’s Law Dictionary 690 (9th ed. 2009)

(emphasis added). This case, in contrast, involves the payment of loan discount

points. See Graham, 740 F.2d at 415 n.2 (defining “point” as a fee or charge

collected at the inception of the loan, including both loan origination and discount

payments, in addition to the long-term interest rate stated on the face of the loan).

      Moreover, we must note, as the district court did, that RESPA is still limited

to “services,” a term the statute leaves undefined and that the court in Graham did

not address. Id. at 418 (“Because of the illumination provided by the list of

settlement services in § 3(3) of RESPA, we need not rely upon any purported

                                          13
common understanding of the term ‘service’, assuming that such an understanding

exists.”). We cannot conceive of a circumstance in which the charging of loan

discount points would qualify under our definition of “service.” The points paid

by the Wootens and Buckhaults were ostensibly in exchange for an interest rate

below market, i.e., to “raise the yield on the loan to the market rate.”

VanDenBroeck v. CommonPoint Mortg. Co., 210 F.3d 696, 702 (6th Cir. 2000)

(citations omitted), abrogated on other grounds by Bridge v. Phoenix Bond &

Indem. Co., 553 U.S. 639, 128 S. Ct. 2131, 170 L. Ed. 2d 1012 (2008). As such,

the points affect the interest rate and go to the very heart of the loan itself.

       The Wootens and Buckhaults “do not disagree that the interest rate on the

mortgage note is not, per se, a settlement service.” Br. of Appellants at 40.

Instead, as prima facie evidence that discount points qualify as a “settlement

service,” they rely on HUD’s placement of the loan discount fee within the 800

number series dedicated to “Items Payable In Connection With Loan” and an

informational booklet provided to potential borrowers.15 Neither argument is


       15
         HUD prepared and distributed the booklet to lenders to be made available to
borrowers pursuant to 24 C.F.R. § 3500.6. It states:

       A. Specific Settlement Costs

       This part of the Booklet discusses the settlement services which you may be
       required to get and pay for and which are itemized in Section L of the HUD-1
       Settlement Statement.
       ....

                                              14
availing.

      The HUD-1 that Quicken provided the Wootens and Buckhaults discloses

discount points on line 802. Line 801 concerns the “Loan Origination Fee,” line

803 the “Appraisal Fee,” line 804 the “Credit Report,” line 805 the “Lender’s

Inspection Fee,” line 806 the “Mortgage Insurance Application Fee,” and line 807

the “Assumption Fee.” Because every item in the 800-series, save line 802,

represents a fee for a “settlement service,” the Wootens and Buckhaults infer that

discount points are also qualifying fees. We do not draw such inference. Points in

this context are part of the loan agreement, not a service provided to borrowers;

therefore, regardless of its location on the HUD-1, the line 802 charge could not be

for a “settlement service.”

      More troubling, however, is their suggestion that we should defer to the

accompanying booklet for our definition of settlement services. HUD regulations

specifically state that the special information booklet is not a “rule, regulation, or

interpretation” for purposes of RESPA, 24 C.F.R. § 3500.4, meaning that even if


      802. Loan Discount: Also called “points” or “discount points,” a loan discount is
      a one-time charge imposed by the lender or broker to lower the rate at which the
      lender or broker would otherwise offer the loan to you. Each “point” is equal to
      one percent of the mortgage amount. For example, if a lender charges two points
      on a $80,000 loan this amounts to a charge of $1,600.

A version of the booklet as described by the Wootens and Buckhaults may be found at U.S.
Dep’t of Hous. & Urban Dev.—Fed. Hous. Admin., Buying Your Home: Settlement Costs and
Helpful Information, available at http://www.hud.gov/offices/hsg/ramh/res/stcosts.pdf.

                                             15
the statutory language were unclear, we would owe the booklet no deference under

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,

104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). See Thorpe v. Housing Auth. of

Durham, 393 U.S. 268, 275, 89 S. Ct. 518, 522, 21 L. Ed. 2d 474 (1969)

(comparing a regulation promulgated in a HUD manual to handbooks and booklets

and concluding the latter are “mere ‘instructions,’ ‘technical suggestions,’ and

‘items of consideration’”).

       In sum, based on our understanding of the statutory text, we conclude that

points are not a “settlement service.” We now proceed to the question of whether,

as the Wootens and Buckhaults contend, the points they paid were not for a below-

market interest rate but, instead, were for services unrelated to interest.

                                             B.

       In reviewing de novo the district court’s dismissal of Count I,16 we, like the

district court, assume that the factual allegations in the complaint are true and give

the plaintiffs the benefit of reasonable factual inferences.

       To survive a motion to dismiss, a complaint must contain sufficient
       factual matter, accepted as true, to state a claim to relief that is
       plausible on its face. A claim has facial plausibility when the plaintiff
       pleads factual content that allows the court to draw the reasonable
       inference that the defendant is liable for the misconduct alleged. The


       16
         We review de novo the sufficiency of Counts I and II. Hazewood v. Found. Fin. Grp.,
LLC, 551 F.3d 1223, 1224 (11th Cir. 2008).

                                             16
       plausibility standard is not akin to a probability requirement, but it
       asks for more than a sheer possibility that a defendant has acted
       unlawfully. Where a complaint pleads facts that are merely consistent
       with a defendant’s liability, it stops short of the line between
       possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal, 556 U.S. ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009)

(internal quotation marks and citations omitted).

       Count I does not satisfy this plausibility standard. Implicit in the allegations

of the complaint is the fact that the Wootens and Buckhaults, on the one side, and

Quicken, on the other, had different understandings of the interest the Wootens and

Buckhaults would be paying on their mortgage loans. The Wootens and

Buckhaults thought they would be paying the going rate of interest; they were not

seeking a lower rate of interest for which they would have to pay points. Quicken

thought the borrowers wanted to obtain a specific below-market rate and would

pay points to obtain it. Quicken’s understanding was evidenced in the notes the

borrowers signed after reading the loan documents, including the HUD-1s and the

entry on line 802, “Loan Discount              %.” Quicken’s understanding was

confirmed when the borrowers made no objection to paying the advance interest

the points called for,17 as indicated in the HUD-1s, and proceeded to close the


       17
           In addition to paying 4.5 points for the initial fixed rate of interest, 5.875%, on the
“Adjustable Rate Note” they signed, the Wootens agreed to pay points on the interest charged
when, and if, the interest rate changed on August 1, 2013, and “on that day every 6th month
thereafter.” See Adjustable Rate Note ¶ 4(A). The “adjustable interest rate will be based on an

                                                17
loans.

         Except for its allegation that the Wootens and Buckhaults “did not negotiate

for a buy-down of the interest rate nor did they receive a lower interest rate in

return for paying points,” Compl. ¶¶ 8–10, the complaint offers nothing to explain

away the obvious fact that they willingly paid points in order to close the mortgage

transactions in accordance with their terms.18 The inescapable inference is that the

borrowers obtained the specific below-market interest rates they bargained

for—and that their claim to the contrary is manifestly implausible. Though the

complaint alleges that the points were exorbitant and “disguised unearned fees” for

services, id. ¶ 17, it nevertheless fails to identify any services that were not

provided in keeping with § 8(b) of RESPA and 24 C.F.R. § 3500.14(c).

         Faced with these facts, the district court properly held that the loan discounts

constituted appropriately agreed upon points for specific below-market interest

rates and not a cover for unearned fees for services. We therefore affirm the

court’s dismissal of Count I of the complaint.



Index. The ‘Index’ is the average of interbank offered rate for six month U.S. dollar-
denominated deposits in the London market (‘LIBOR’), as published in The Wall Street
Journal.” Id. ¶ 4(B).
         18
           We say this because nowhere in the complaint is it alleged that the Wootens and
Buckhaults did not read the notes they signed and line 802 of the HUD-1. Nor is it alleged that
Quicken fraudulently misrepresented the requirement that the Wootens and Buckhaults pay the
points in order to obtain the specified interest rates.

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                                         IV.

      The district court dismissed Count II on the ground that the complaint’s

allegations failed to establish that Quicken breached its contracts with the Wootens

and Buckhaults. We affirm the court’s ruling. We do so for the reasons stated in

part III.B; the complaint’s allegations demonstrate that by the time the mortgage

loans were closed, the parties reached a meeting of the minds and that the Wootens

and Buckhaults received what they bargained for.

      AFFIRMED.




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