FinanceIntermediateCalifornia Exam

What is the purpose of RESPA (Real Estate Settlement Procedures Act)?

ATo set maximum mortgage interest rates, consistent with conventional financing terms

BTo require disclosure of settlement costs and prohibit kickbacksCorrect

CTo regulate real estate agent commissions, per standard amortization and lending convention

DTo insure mortgage loans against default, under standard California mortgage lending practice

Why To require disclosure of settlement costs and prohibit kickbacks Is Correct

Answer B: To require disclosure of settlement costs and prohibit kickbacks

RESPA requires lenders to provide borrowers with disclosures about settlement costs and prohibits kickbacks, referral fees, and unearned fees between settlement service providers.

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.