Under RESPA, a lender may not require a buyer to purchase title insurance from a specific company affiliated with the lender unless:
Why The affiliated business arrangement is disclosed and the buyer is not required to use it Is Correct
Answer B: The affiliated business arrangement is disclosed and the buyer is not required to use it
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
People Also Study
Related Alabama Questions
- Which type of title insurance policy protects the lender in an Alabama real estate transaction?Escrow & Title
- A title insurance policy that protects the lender's interest is called a:Escrow & Title
- A lender's title insurance policy protects:Escrow & Title
- Which type of loan insures the lender against loss and allows borrowers to purchase with as little as 3.5% down with a 580+ credit score?Finance
- Under RESPA, a 'Affiliated Business Arrangement' (AfBA) disclosure must be provided when:Finance
- A buyer's lender requires a lender's title insurance policy. Who typically pays for this in Alabama?Escrow & Title
- What is the purpose of title insurance from a lender's perspective?Finance
- When a lender requires a buyer to purchase homeowner's insurance as a condition of the loan, the lender is protecting:Finance
Key Terms to Know
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →