In a sale financed by a federally related mortgage loan, the seller requires the buyer to purchase and pay for title insurance from a named company as a condition of sale. No referral fee is involved. What does RESPA Section 9 provide?
Correct Answer
C) The seller may not impose that requirement; a violation can make the seller liable for three times the buyer's title-insurance charges
C. The seller cannot condition this sale on the buyer purchasing title insurance from that company. The statute covers direct and indirect seller requirements in a sale assisted by a federally related mortgage loan. Its liability measure is three times all charges for the title insurance, not merely a price difference. Scope and exceptions: Apply the specified buyer-purchase and covered-loan facts. Do not confuse this rule with the separate kickback prohibition or assume every recommendation is a required purchase. A disputed claim still requires establishing the violation. Source: Section 1024.16 — https://www.consumerfinance.gov/rules-policy/regulations/1024/16/ 12 USC 2608(a)–(b), 2024 edition — https://www.govinfo.gov/content/pkg/USCODE-2024-title12/html/USCODE-2024-title12-chap27-sec2608.htm
Why This Is the Correct Answer
C. The seller cannot condition this sale on the buyer purchasing title insurance from that company. The statute covers direct and indirect seller requirements in a sale assisted by a federally related mortgage loan. Its liability measure is three times all charges for the title insurance, not merely a price difference. Scope and exceptions: Apply the specified buyer-purchase and covered-loan facts. Do not confuse this rule with the separate kickback prohibition or assume every recommendation is a required purchase. A disputed claim still requires establishing the violation.
Why the Other Options Are Wrong
Option A: The requirement is permitted if the company charges prevailing market rates
Market pricing does not cure the imposed choice.
Option B: The seller is liable only for the amount by which the premium exceeds competing quotes
It substitutes excess-price damages for the statutory measure.
Option D: The requirement is permitted because no referral fee is paid
A referral payment is not an element of this Section 9 prohibition.
Exam Tip
Required title-insurer selection can violate Section 9 without a kickback.
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