Finance (alternative)
Under RESPA, a kickback or unearned fee paid in connection with a Maryland real estate settlement service is:
APermitted if disclosed on the Closing Disclosure
BProhibited and may result in criminal penalties✓ Correct
CAllowed between affiliated business arrangements only
DPermitted if both parties consent in writing
Explanation
RESPA Section 8 strictly prohibits kickbacks, referral fees, or unearned fees between settlement service providers. Violations can result in civil and criminal penalties.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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