A closing shows both a $275 "processing fee" and a $250 "file handling fee" to the same company for the same work. What is the problem with the second one?
Correct Answer
C) Pay only for actual, necessary, distinct services performed
Why this is correct: The governing rule is RESPA RESPA's anti-kickback rule (the governing federal rule, which prohibits giving or accepting any fee, kickback, or thing of value for a referral of business. A key exception is payment for services actually performed. Therefore, the only compliant handling is to ensure payment is made only for services that are actual, necessary, and distinct. Why the other choices are wrong: "Treat professional conduct as satisfied by an oral manager approval" is wrong because oral approval does not satisfy the legal requirement for payment to be tied to real services. "Treat prior mortgage experience as a substitute for the required compliance condition" is wrong because prior experience does not excuse current violations of RESPA's anti-kickback rules. "Use a generic national checklist instead of the requirement in this file documentation check" is wrong because generic checklists cannot replace the specific, fact-based analysis required to determine if a service was actually performed. Exam tip: When you see "settlement provider" and "paid for a task not performed," the answer is always the principle of paying only for actual, necessary, distinct services. Manager approval, experience, or checklists are never valid substitutes.
Why This Is the Correct Answer
The correct response is "Pay only for actual, necessary, distinct services performed". The ethical and legal distinction is payment for real services, not a label or customary amount.
Why the Other Options Are Wrong
Option A: Treat professional conduct as satisfied by an oral manager approval.
Treat professional conduct as satisfied by an oral manager approval. is not correct because it bypasses the rule supported by the explanation.
Option B: Treat prior mortgage experience as a substitute for the required compliance condition.
Treat prior mortgage experience as a substitute for the required compliance condition. is not correct because it bypasses the rule supported by the explanation.
Option D: Use a generic national checklist instead of the requirement in this file documentation check.
Use a generic national checklist instead of the requirement in this file documentation check. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For RESPA fee questions, ask what service was actually performed.
Exam Tip
For RESPA fee questions, ask what service was actually performed.
Common Mistakes to Avoid
- -Renaming an unearned fee does not make it earned.
More Ethics & Fraud Questions
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
An MLO recommends a loan with a low initial payment that will increase sharply in two years. The borrower says retirement income will be fixed and asks whether the payment can change. What is the appropriate response?
An MLO alters a bank statement to make the applicant's account balance appear higher and submits it to underwriting. Which response is appropriate?
A branch manager asks about a loan file because marketing proposes a rate the company is not prepared to offer. What should happen?
A borrower wants cash for necessary home repairs. A proposed refinance provides $15,000 cash but adds $12,000 in costs and extends repayment by 15 years. What is the best next step for the MLO?
Before closing, the team discovers that an ad shows an interest rate but omits the APR presentation. What is the safest compliant answer?
The loan team is resolving Privacy and Confidentiality during a quality-control sample. Which action best fits the rule?
A house last sold for $185,000 in January. In March it changes hands 3 times in 9 days, reaching $410,000, with the same appraiser and the same closing agent on every leg. Assuming the parties colluded to inflate appraisals without improvements to support the higher prices, what fraud scheme does this pattern illustrate?
For closings involving federally related mortgage loans, a title company pays a real estate brokerage $75 for each referred client who closes. The brokerage only passes along the client’s name and number. Does this referral payment comply with RESPA Section 8?
Before closing, the team discovers that a loan officer wants different terms because of a protected applicant characteristic. What is the safest compliant answer?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
For a covered mortgage, a creditor verifies income and debts but qualifies the borrower using only a temporary introductory payment instead of the payment required by the ATR rule. What is the problem?
Next Question
A quality-control reviewer flags a case because an ad shows an interest rate but omits the APR presentation. What correction is appropriate?