A mortgage loan originator receives a referral fee from a real estate agent for directing clients to that agent. This arrangement is:
Correct Answer
B) Prohibited under RESPA as an illegal kickback
Under RESPA Section 8, giving or receiving anything of value for referrals of settlement service business is prohibited. This includes referral fees between MLOs and real estate agents, regardless of disclosure or amount.
Why This Is the Correct Answer
Under RESPA Section 8, giving or receiving anything of value for referrals of settlement service business is prohibited. This includes referral fees between MLOs and real estate agents, regardless of disclosure or amount.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
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Previous Question
An MLO encounters an application where the borrower's adult child is listed as a co-borrower but will not live in the property, and the income ratios only work with both incomes included. The child admits they are only helping their parent qualify. This represents:
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A borrower provides a lease agreement showing $3,500 monthly rental income from a basement apartment. During the property inspection, the MLO discovers the basement has no separate entrance and shares utilities with the main residence. What red flag does this scenario present?