Finance
Under RESPA, a 'kickback' or unearned fee in a real estate transaction settlement is:
APermitted if disclosed on the Closing Disclosure
BIllegal and subject to fines and criminal penalties✓ Correct
CAllowed between affiliated businesses only
DPermitted if under $500
Explanation
RESPA Section 8 prohibits kickbacks, fee-splitting, and unearned fees in federally related mortgage transactions. Violations can result in fines, imprisonment, and civil liability.
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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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