Finance
What is the 'Real Estate Settlement Procedures Act' (RESPA) and what does it prohibit?
AA Nevada state law requiring settlement companies to be licensed
BA federal law requiring disclosures about settlement costs and prohibiting kickbacks, referral fees, and fee-splitting arrangements between settlement service providers in federally related mortgage transactions✓ Correct
CA law setting maximum closing cost amounts for Nevada transactions
DA federal law requiring sellers to pay all closing costs
Explanation
RESPA (Regulation X) governs residential mortgage transactions. It requires the Loan Estimate and Closing Disclosure, prohibits kickbacks and unearned fees among settlement service providers (Section 8), and prohibits requiring the use of specific title companies (Section 9). In Nevada, RESPA violations — such as a lender requiring buyers to use a specific title company the lender has a financial interest in — can result in significant fines and private lawsuits.
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