A title company pays a real estate brokerage $75 for every closing the brokerage sends its way. The brokerage does no work on the title file beyond passing the client's name and number. Does this referral payment comply with RESPA Section 8?
Correct Answer
B) Prohibited: the $75 pays for a referral, and a referral is not a service
Section 8 forbids giving or accepting a fee or thing of value for referring settlement service business, and a referral is expressly not a compensable service. Other choices: there is no small-payment exception, so the size of the $75 is beside the point; being separate businesses is the situation the prohibition addresses rather than an escape from it; and nothing turns on whether the buyer was steered to a cheaper title company, because the payment itself is the violation. Source: 12 CFR 1024.14(b)
Why This Is the Correct Answer
Section 8 forbids giving or accepting a fee or thing of value for referring settlement service business, and a referral is expressly not a compensable service. Other choices: there is no small-payment exception, so the size of the $75 is beside the point; being separate businesses is the situation the prohibition addresses rather than an escape from it; and nothing turns on whether the buyer was steered to a cheaper title company, because the payment itself is the violation. Source: 12 CFR 1024.14(b)
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