Finance
Under RESPA, a Maine lender who refers a borrower to an affiliated title company may be required to:
ACharge the same rate as non-affiliated companies
BProvide an Affiliated Business Arrangement (AfBA) disclosure✓ Correct
CUse only non-affiliated companies
DReduce the closing costs proportionally
Explanation
RESPA's Affiliated Business Arrangement (AfBA) disclosure requirement applies when a lender (or any settlement service provider) refers business to a company in which it has an ownership interest, ensuring borrowers know about the relationship.
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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.
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
State-Specific Concepts
Disclosure Requirements
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