One of the more surprising developments in the law of the Real Estate Settlement Procedures Act is the fledgling success of the continuing-violations doctrine, which allows claims to be brought long after the initial statute of limitations has expired. A new decision from a Pennsylvania federal court suggests that the doctrine isn’t going away any time soon.In the ruling, Blake v. JPMorgan Chase Bank, N.A., the court grappled with allegations that have become familiar in the real estate industry: purported RESPA violations stemming from what are known as captive-reinsurance arrangements. In those scenarios, a lender refers customers to mortgage insurers that purchase reinsurance—a form of risk sharing—from a subsidiary of the referring lender. According to some, that process amounts to an illegal referral scheme. The renowned enforcement action against PHH Corporation resulted from reinsurance arrangements.
The court in Blake addressed another question common to these types of cases: whether the consumers’ claims were untimely. Under the continuing-violations doctrine, each successive payment or charge (for mortgage insurance, for example) constitutes a separate legal violation. That starts a new statute of limitations, giving the consumer more time to sue.
The Blake court had already allowed the continuing-violations doctrine in an earlier decision, so the issue this time was whether anything had changed in the interim that would compel a different outcome. The principle relevant change was the vacating of the PHH opinion, which was the central legal authority underpinning the court’s earlier ruling. According to the judge in Blake, even if the PHH opinion was no longer viable and had been overturned, he still found its reasoning persuasive on the question of whether RESPA permits plaintiffs to invoke the continuing-violations doctrine. Blake also rejected the argument that the consumers’ knowledge about the captive-reinsurance arrangement barred them from relying on the continuing-violations doctrine.
Other courts will no doubt weigh in on this matter, and it’s too early to say how it will end. It is nonetheless an important question that warrants serious attention.