A title company offers a mortgage originator four tickets worth $900 in exchange for 12 referrals of settlement business involving federally related mortgage loans. How should the originator respond under RESPA Section 8?
Correct Answer
B) Refuse the tickets because they are compensation for the specified referrals
B. Refuse the referral-compensation tickets. Noncash benefits can be things of value under RESPA. The stem establishes an exchange for referrals, not merely coincidental timing. Scope and exceptions: The answer does not classify every business gift as unlawful. Evaluate coverage, the agreement or understanding, and applicable exceptions; $900 and 12 referrals are not thresholds. Source: Section 1024.14(b), (d), (e), (g) — https://www.consumerfinance.gov/rules-policy/regulations/1024/14/
Why This Is the Correct Answer
B. Refuse the referral-compensation tickets. Noncash benefits can be things of value under RESPA. The stem establishes an exchange for referrals, not merely coincidental timing. Scope and exceptions: The answer does not classify every business gift as unlawful. Evaluate coverage, the agreement or understanding, and applicable exceptions; $900 and 12 referrals are not thresholds.
Why the Other Options Are Wrong
Option A: Accept them where the $900 value is reported as taxable income
Tax reporting would not cure the prohibited exchange.
Option C: Accept them, since tickets are hospitality rather than a payment
Calling tickets hospitality does not change their purpose.
Option D: Refuse them only where the title company asks for more referrals
Compensation for past referrals does not require a request for future ones.
Exam Tip
Analyze the purpose of a benefit, not just its form.
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