Finance
Under RESPA, a 'kickback' in a real estate transaction refers to:
AA commission refund to the buyer
BAn unearned fee or thing of value given to a party in exchange for a referral of settlement service business✓ Correct
CA penalty charged by the lender for early loan payoff
DA credit given by the seller at closing
Explanation
RESPA Section 8 prohibits kickbacks and fee-splitting arrangements for settlement service referrals. Any fee or thing of value exchanged for referring business to a settlement service provider (title company, lender, etc.
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Key Terms to Know
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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