Finance
RESPA (Real Estate Settlement Procedures Act) prohibits:
ALenders from requiring escrow accounts for taxes and insurance
BKickbacks and unearned referral fees between settlement service providers✓ Correct
CBuyers from using FHA-insured loans on investor properties
DSellers from paying any portion of the buyer's closing costs
Explanation
RESPA prohibits kickbacks, referral fees, and fee-splitting arrangements between settlement service providers (lenders, title companies, agents, etc.) that are not for services actually performed.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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