A team member asks about RESPA Settlement Services in an investor-delivery review while trying to choose the compliant next step. Which response should the file reviewer use?
Correct Answer
C) Use the written provider-list rule for shoppable services
Why this is correct: RESPA rules regarding settlement services aim to protect borrower choice and prevent kickbacks. For services where the borrower is allowed to shop ("shoppable services"), the lender must provide a written list of at least one available provider. The correct answer, "Use the written provider-list rule for shoppable services," directly references this specific compliance requirement, ensuring the borrower receives the mandated information to make an informed choice. Why the other choices are wrong: "Resolve the RESPA Settlement Services issue with the credit underwriting exception that does not fit the facts" is wrong because applying an irrelevant exception does not correct a RESPA violation. "Require a preferred provider and still treat the borrower as having shopped" is wrong because requiring a specific provider violates the borrower's right to shop and the lender's duty to provide a list of options. "Hide an affiliate relationship because the service fee is reasonable" is wrong because RESPA requires disclosure of affiliate relationships (e.g., on the Affiliated Business Arrangement form) regardless of the fee's reasonableness; hiding it is illegal. Exam tip: For "shoppable" settlement services, the written provider list is a key RESPA requirement. Remember: list required, choice preserved.
Why This Is the Correct Answer
The correct response is "Use the written provider-list rule for shoppable services" because Third-party settlement services must avoid referral fees and follow provider-list/tolerance rules.
Why the Other Options Are Wrong
Option A: Resolve the RESPA Settlement Services issue with the credit underwriting exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: Require a preferred provider and still treat the borrower as having shopped.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Option D: Hide an affiliate relationship because the service fee is reasonable.
This choice is a tempting shortcut, but it conflicts with third-party settlement-service controls because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
third-party settlement-service controls: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For third-party settlement-service controls questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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