Finance
RESPA (Real Estate Settlement Procedures Act) prohibits:
ALenders from requiring escrow accounts
BKickbacks and unearned fees in connection with a federally related mortgage loan✓ Correct
CSellers from paying buyer's closing costs
DBorrowers from shopping for their own title insurance
Explanation
RESPA prohibits the payment of kickbacks and referral fees in connection with federally related mortgage transactions. It requires disclosure of settlement costs and prohibits unearned fees.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Closing CostsFees 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.
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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Math Concepts
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