Escrow & Title
A RESPA violation occurs when a settlement service provider receives or gives a 'kickback' or unearned fee. Which statement is CORRECT?
AKickbacks between lenders and real estate agents are permitted if disclosed
BRESPA prohibits giving or receiving any fee, kickback, or thing of value for the referral of settlement service business✓ Correct
CRESPA only applies to commercial real estate transactions
DKickbacks are permitted if they are under $50
Explanation
RESPA (the Real Estate Settlement Procedures Act) strictly prohibits kickbacks, fee-splitting, and unearned fees in connection with federally related mortgage loan transactions. These prohibitions apply regardless of disclosure.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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