Finance
Under RESPA, a 'controlled business arrangement' (affiliated business arrangement) must be disclosed when:
AA broker earns a commission from any transaction
BSettlement service providers refer business to entities they have a financial interest in✓ Correct
CA lender changes the interest rate after loan application
DA title company raises its fees
Explanation
RESPA requires an Affiliated Business Arrangement (AfBA) disclosure when a settlement service provider refers business to an affiliated company in which they have a financial interest.
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Key Terms to Know
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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
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