Escrow & Title
RESPA prohibits which of the following at settlement?
ACharging a reasonable title search fee
BPaying kickbacks or unearned fees between settlement service providers✓ Correct
CCollecting prepaid interest
DRequiring title insurance
Explanation
RESPA Section 8 prohibits kickbacks, fee-splitting, and unearned fees between settlement service providers. For example, a title company cannot pay a broker a referral fee for sending business.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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