                                                        [DO NOT PUBLISH]


             IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT           FILED
                     ________________________ U.S. COURT OF APPEALS
                                                        ELEVENTH CIRCUIT
                                                           Dec. 04, 2009
                            No. 09-11149
                                                         THOMAS K. KAHN
                        Non-Argument Calendar
                                                             CLERK
                      ________________________

               D.C. Docket No. 07-00340-CV-FTM-34DNF

PETER F. SUTTON,

                                                    Plaintiff-Appellant,

                                 versus

COUNTRYWIDE HOME LOANS, INC.,
a foreign for profit corporation,

                                                    Defendant-Appellee.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Florida
                     ________________________

                           (December 4, 2009)

Before CARNES, MARCUS and COX, Circuit Judges.

PER CURIAM:
      Peter F. Sutton appeals the grant of summary judgment to Countrywide Home

Loans, Inc. on Sutton’s claims under the Real Estate Settlement Procedures Act

(“Real Estate Act”), 12 U.S.C. § 2607. We affirm.

      Sutton owned a home subject to two mortgages, but his only source of income

was a $1,080 monthly social security benefit. He desired to reduce his mortgage

payments, which exceeded $1,400 per month. So, he sought help from a mortgage

broker with Apex Mortgage Services to obtain a refinance loan. During a telephone

conversation with Sutton, the broker took down information for a loan application,

and then he shopped the loan application to several lenders. According to Sutton, the

broker led him to believe that he could receive, from Countrywide, a refinance loan

with payments of $428 per month. The broker, however, ultimately arranged for

Sutton an adjustable rate loan with Countrywide requiring monthly payments starting

at over $1,000 per month and subject to further increases. Sutton signed forms stating

he agreed to the terms of the loan arranged by the Apex broker. He claims, however,

that he did not understand the terms of the loan until after closing. As compensation

for brokering Sutton’s loan, Countrywide paid Apex $7,270. This payment included

a “yield spread premium” of $4,710, which is a payment made in exchange for the

broker delivering a mortgage above the “par rate” being offered by the lender.




                                          2
       Sutton alleges that in applying for this loan on Sutton’s behalf, the broker

committed a variety of acts that were “wrongful, fraudulent, and predatory.”

(Appellant’s Br. at 13.) For example, the broker reported on the loan application that

Sutton earned a monthly salary of $4,500 even though Sutton informed the broker

that his actual income was about one-fourth that amount. Also, Sutton’s existing

mortgage had a prepayment penalty, and the broker did not notify Sutton of this fact.

       Sutton filed suit against Countrywide in Hendry County, Florida Circuit Court

alleging a violation of the Real Estate Act. He also brought state law claims for

deceptive trade practices, fraud, and elder abuse. Countrywide removed the case to

the United States District Court for the Middle District of Florida, invoking federal

question and diversity jurisdiction. Sutton then amended his complaint to add Apex

as a defendant. But, Apex is apparently no longer in business, and it did not make an

appearance to defend the lawsuit. A default was entered against Apex, and Sutton

ultimately dismissed with prejudice all claims against it.1




       1
          When Sutton filed his notice of appeal, no judgment had been entered against Apex, but only
an entry of default. We ordered supplemental briefing to address whether there was a final judgment
as to all parties to this action. We do not construe the district court’s order of January 29, 2009 to
remand any federal claims against Apex to the Florida Circuit Court. Sutton has now filed a
voluntary notice of dismissal with prejudice of his claims against Apex. The dismissal of Apex
cured any jurisdictional defect that would have prevented our review of the merits of this appeal.
See Kramer v. Unitas, 831 F.2d 994, 997 (11th Cir. 1987).

                                                  3
      Countrywide moved for summary judgment, which the court granted as to the

Real Estate Act claim. The court summarized Sutton’s theory of the case as arguing

that “because Apex allegedly did bad things in assisting Sutton with his refinancing,

Countrywide should not have paid Apex any yield spread premium.” (R.4-95 at 4.)

It held that because Sutton presented no evidence Countrywide colluded with Apex,

or knew or should have known that Apex did “bad things” in brokering the loan, there

were no genuine issues of material fact. The court granted Countrywide summary

judgment for the Real Estate Act claim and declined to maintain supplemental

jurisdiction over the remaining state claims. Sutton appeals the entry of summary

judgment for the Real Estate Act claim.

      The Real Estate Act proscribes the payment of kickbacks and unearned fees in

association with mortgage lending. A payment by a lender to a mortgage broker

violates the anti-kickback provisions of the Act when it is made solely in exchange

for a referral of business. A payment does not violate the Act if it bears a reasonable

relationship to goods or services actually provided or performed by the broker. 12

U.S.C. § 2607(c).

      This case involves a yield spread premium. The lowest interest rate at which

a lender will make loans without charging a borrower additional up-front fees is

commonly referred to as the par rate. If a broker arranges a loan with an interest rate

                                          4
below the par rate, the lender generally requires the broker to pay discount points;

these costs are passed along to the borrower. In contrast, if a broker arranges a loan

with an interest rate above the par rate, the lender pays the broker a yield spread

premium. This payment is often passed along, in part, to the borrower in the form of

reduced loan closing costs. See e.g. Culpepper v. Inland Mortg. Corp., 132 F.3d 692,

694 (11th Cir. 1998) (describing yield spread premiums). In this case, Countrywide

paid Apex a yield spread premium of $4,710, and Sutton paid no cash at closing.

(R.2-49, Ex. 4.)

      We apply a two-step test to consider whether a yield spread premium violates

the anti-kickback provisions of the Real Estate Act.

      First, we ask whether the broker performed “actual services” in the
      course of arranging the mortgage transaction . . . . If the answer to the
      first question is no, then a [Real Estate Act] violation has been
      established. If the answer to the first question is yes, we then proceed
      to ask whether the total compensation was reasonable in light of the total
      array of services that the broker performed.

Culpepper v. Irwin Mortg. Corp., 491 F.3d 1260, 1273 (11th Cir. 2007) (citations

omitted) (applying test set forth in Department of Housing and Urban Development

statement of policy). Sutton argues that Apex’s acts should not count as “actual

services” for purposes of this analysis because they were undertaken as part of a

scheme to defraud Sutton by misrepresenting his financial capacity to Countrywide



                                          5
and arranging for him an “unsuitable loan.” (Appellant’s Reply Br. at 9.) Because

Apex provided no “actual services,” Sutton argues, any yield spread premium

payment to Apex violated the Real Estate Act under step one of the test. Sutton also

contends that even if Apex is found to have offered “actual services,” the

compensation was unreasonable under step two of the test because the “total array of

services” that Apex performed was of no value to Sutton in that he was left with a

loan he could not afford. We reject these arguments.

      The Real Estate Act’s anti-kickback provisions forbid lenders from

compensating brokers for referrals. These provisions are not the appropriate vehicle

for considering globally—as Sutton would have us do—whether a broker provided

fair, honest, and competent service to a borrower. Instead, we consider whether the

broker performed actual brokerage services; whether it completed tasks or provided

goods related to the arrangement of a mortgage that warrant payment from the lender

or borrower. If so, we ask if any payment bears “a reasonable relationship to the

value received by the person or company making the payment.” Real Estate

Settlement Procedures Act Statement of Policy 1999-1 Regarding Lender Payments

to Mortgage Brokers, 64 Fed. Reg. 10080, 10086 (March 1, 1999) (emphasis added).

In arranging Sutton’s loan, it is undisputed Apex actually completed tasks commonly

performed in the origination of a loan. See id. at 10085 (listing common loan

                                         6
origination services). Because Apex performed tasks to further the processing and

origination of the loan, Countrywide received value from Apex’s services. So, its

payment to Apex was not a kickback or unearned fee under step one of our analysis.

As to step two, Sutton presents no evidence that Countrywide’s payment to Apex was

an unreasonably high sum for the types of services Apex performed. Therefore, the

yield spread premium in this case satisfies both prongs of the test.

       Whether or not Apex acted out of its own self interest to arrange a loan with

unfavorable terms for Sutton, this does not negate the fact that Apex performed

“actual services” in brokering the loan.2 Nor does it cause an otherwise reasonable

fee for these services to violate the anti-kickback provisions of the Real Estate Act.

Because Apex provided “actual services” in arranging Sutton’s loan and because the

total compensation paid to Apex was not unreasonable, Countrywide’s payment did

not violate the Real Estate Act.

                                         CONCLUSION

       For the foregoing reasons, we affirm the judgment.

       AFFIRMED.


       2
        The district court’s opinion includes an implicit finding that the yield spread premium in this
case was not unreasonably high. The court also held Sutton presented no evidence that Countrywide
colluded with or knew of Apex’s alleged misconduct in arranging Sutton’s loan. (R.4-95 at 4). We
conclude that Sutton has not presented sufficient evidence to show that Countrywide knew or should
have known of any acts taken by Apex that could give rise to a colorable claim of fraud. Therefore,
we do not consider whether Countrywide would have violated the anti-kickback provisions of the
Real Estate Act had it colluded with Apex to arrange an unfavorable loan for Sutton.

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