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:
Correct Answer
A) Prohibited as an illegal kickback under Section 8(a)
This arrangement violates RESPA Section 8(a) because the $500 credit constitutes a thing of value given for the referral of settlement service business. The fact that the entities are affiliated does not exempt them from the prohibition against kickbacks, and the credit incentivizes borrowers to use the affiliated service.
Why This Is the Correct Answer
This arrangement violates RESPA Section 8(a) because the $500 credit constitutes a thing of value given for the referral of settlement service business. The fact that the entities are affiliated does not exempt them from the prohibition against kickbacks, and the credit incentivizes borrowers to use the affiliated service.
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A borrower's interest rate increases by 0.25% three days before closing due to credit score changes discovered during final verification. The original Closing Disclosure was provided 6 days earlier. What must occur?
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