A quality-control reviewer flags a case because a settlement provider asks to be paid for a task it did not actually perform. What correction is appropriate?
Correct Answer
D) Pay only for actual, necessary, distinct services performed
Why this is correct: Under RESPA (the governing federal rule, a settlement service provider cannot be paid for a service that was not actually rendered. This is a fundamental consumer protection against unearned fees and kickbacks. The appropriate correction is to reverse or prevent any payment for the unperformed task and ensure future payments are only for actual, necessary, and distinct services. Why the other choices are wrong: "Treat prior mortgage experience as a substitute for the required compliance condition" is wrong because experience does not create an exception to the legal prohibition against paying for unperformed services. "Use a generic national checklist instead of the requirement in this license-status check" is wrong because a checklist is a tool, not a substantive rule; it cannot override the specific RESPA requirement. "Document that professional conduct was reviewed, but take no required corrective action" is wrong because merely documenting a violation without correcting it (i.e., stopping the improper payment) is non-compliant. Exam tip: In quality control or correction scenarios, the proper action is always to align with the substantive law—here, ensuring payment is for real work. Documentation or experience reviews are processes, not corrections.
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 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 B: Use a generic national checklist instead of the requirement in this license-status check.
Use a generic national checklist instead of the requirement in this license-status check. is not correct because it bypasses the rule supported by the explanation.
Option C: Document that professional conduct was reviewed, but take no required corrective action.
Document that professional conduct was reviewed, but take no required corrective action. 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 file escalation meeting, the supervisor sees facts tied to RESPA Kickbacks and Referrals. What should the file reflect?
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
At closing, an MLO adds a single-premium credit-life policy to the loan amount even though the borrower declined it and the policy is not required for approval. Which practice is the clearest concern?
A refinance eliminates a borrower's fixed-rate loan, adds substantial fees, provides no cash or lower payment, and restarts a 30-year term. What should the MLO do before recommending it?
An applicant has verified monthly income of $5,000 and monthly obligations of $4,700 after the proposed mortgage payment. The applicant expects an undocumented raise next year. What should the MLO do?
A lender bases approval entirely on the home's high appraised value and does not verify the borrower's income or existing debts. What is the central compliance concern?
A borrower agrees to a mortgage but declines an optional home-warranty plan. The final loan documents nevertheless finance a $2,400 warranty premium. What should the MLO do?
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?
To obtain approval, an MLO changes a self-employed applicant's verified monthly income from $6,000 to $9,000 without supporting documentation. How should this conduct be characterized?
A homeowner is encouraged to refinance for the third time in 18 months. Each loan generates new points and fees, while the borrower's payment and rate do not improve. Which practice is most strongly indicated?
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