Rhode Island License Law
A Rhode Island broker receives payment from a lender for referring a buyer to the lender's mortgage products. Under RESPA, this payment is:
AAlways legal as a business arrangement
BIllegal if it is a kickback for a referral and not for actual services provided✓ Correct
CLegal if the buyer consents in writing
DLegal if the payment is under $1,000
Explanation
RESPA (Section 8) prohibits kickbacks or referral fees for the referral of business in a federally related mortgage loan. A broker receiving payment from a lender merely for referring buyers (without providing genuine services) violates RESPA.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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.
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.
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.
State-Specific Concepts
License Law
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