A processor handoff raises an RESPA Servicing Requirements question for a licensing coordinator. What answer should guide the file?
Correct Answer
B) Give the AFBA disclosure and avoid required use
Why this is correct: The Real Estate Settlement Procedures Act (RESPA) includes specific requirements for servicing transfers and affiliated business arrangements (AFBAs). Regarding AFBAs, RESPA requires that a disclosure be given to the consumer whenever a referral is made to an affiliated service provider. The disclosure must state that the consumer is not required to use the affiliated provider. The correct answer, "Give the AFBA disclosure and avoid required use," captures this core RESPA requirement, matching the original explanation. Why the other choices are wrong: "Treat the RESPA Servicing Requirements review as complete because the file contains a related rate-lock note" is wrong because a rate-lock note is unrelated to RESPA's servicing or affiliated business disclosure requirements; its presence does not satisfy those specific rules. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because RESPA disclosures must be provided at specified times during the transaction; waiting for a regulator is non-compliant. "Rely on oral agreement when the rule requires documented compliance" is wrong because RESPA's AFBA disclosure must be in writing; an oral agreement is insufficient. Exam tip: For RESPA AFBA questions, remember the two key elements: a written disclosure must be provided, and it must state that use of the affiliate is not required.
Why This Is the Correct Answer
The correct response is "Give the AFBA disclosure and avoid required use" because RESPA/Regulation X limits referral value and sets servicing disclosure and response duties.
Why the Other Options Are Wrong
Option A: Treat the RESPA Servicing Requirements review as complete because the file contains a related rate-lock note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
RESPA servicing and affiliated-business rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to RESPA servicing and affiliated-business rules; do not choose an exception or shortcut that skips the required rule.
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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