A title agency pays another company's employee $200 solely for referring settlement business. Separately, real estate brokers divide a commission while acting in a cooperative real estate brokerage capacity, a title insurer reasonably pays its appointed agent for policy-issuance services, and a lender reasonably pays an attorney for legal work actually performed. Which payment falls outside RESPA's listed exceptions?
Correct Answer
C) Only the $200 referral payment to another company's employee
C. The payment solely for referral to another company’s employee is outside the stated exceptions. The own-employee exception does not extend to somebody else’s employee. The other facts specify actual attorney work, title-policy issuance services and a cooperative real estate brokerage arrangement, rather than disguising a referral payment as work. Scope and exceptions: This evaluates the listed RESPA exceptions, not compliance with every law. A real estate brokerage fee-division exception is not a general exemption for mortgage-broker referral arrangements. Source: 1024.14(b), (g)(1)(i), (ii), (v), (vii) — https://www.consumerfinance.gov/rules-policy/regulations/1024/14/
Why This Is the Correct Answer
C. The payment solely for referral to another company’s employee is outside the stated exceptions. The own-employee exception does not extend to somebody else’s employee. The other facts specify actual attorney work, title-policy issuance services and a cooperative real estate brokerage arrangement, rather than disguising a referral payment as work. Scope and exceptions: This evaluates the listed RESPA exceptions, not compliance with every law. A real estate brokerage fee-division exception is not a general exemption for mortgage-broker referral arrangements.
Why the Other Options Are Wrong
Option A: Only the cooperative real estate brokerage commission split
The stated cooperative real estate brokerage arrangement is expressly permitted.
Option B: All four payments are permitted merely because businesses are involved
Business-to-business involvement is not a universal exception.
Option D: All four payments are prohibited because they involve settlement services
It ignores the listed exceptions for the other arrangements.
Exam Tip
Identify who pays whom and what actual service or specific exception supports payment.
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