Finance
RESPA (Real Estate Settlement Procedures Act) prohibits:
ASeller-paid closing costs
BKickbacks and unearned fees between settlement service providers✓ Correct
CAssumable mortgages
DLenders from requiring escrow accounts
Explanation
RESPA prohibits kickbacks, fee-splitting, and unearned fees among settlement service providers (lenders, title companies, real estate agents, etc.) because such practices inflate closing costs for consumers.
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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.
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.
Math Concepts
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