A mortgage lender establishes a captive reinsurance company to reinsure title insurance policies on loans it originates. The lender receives reinsurance premiums but does not require borrowers to use any specific title company. This arrangement:
Correct Answer
B) Is permitted under RESPA's captive reinsurance safe harbor
RESPA Section 8 provides a specific safe harbor for captive reinsurance arrangements where lenders can receive reinsurance premiums as long as they don't require borrowers to purchase title insurance from specific companies and meet other regulatory requirements.
Why This Is the Correct Answer
RESPA Section 8 provides a specific safe harbor for captive reinsurance arrangements where lenders can receive reinsurance premiums as long as they don't require borrowers to purchase title insurance from specific companies and meet other regulatory requirements.
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A real estate brokerage creates a subsidiary mortgage company where the same employees work for both entities. Borrowers who use the mortgage subsidiary receive a $500 credit toward closing costs. Under RESPA, this arrangement is:
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