A team member asks about Appraiser Independence Requirements in an investor-delivery review while trying to decide how the file should be documented. Which response should the supervisor use?
Correct Answer
A) Disclose third-party charges in the proper category
Why this is correct: The Appraiser Independence Requirements (AIR) and related RESPA rules mandate transparency and prohibit conflicts of interest. A core principle is the proper disclosure of all third-party settlement service charges in the correct category on the Loan Estimate and Closing Disclosure. This ensures borrowers are informed and that tolerance rules are followed. Why the other choices are wrong: "Hide an affiliate relationship because the service fee is reasonable" violates disclosure rules; reasonableness does not excuse hiding a relationship. "Treat a referral arrangement as acceptable because no borrower complained" is wrong; referral fees are illegal regardless of complaints. "Change the provider list after the borrower chooses a service to avoid tolerance review" is prohibited; the provider list must be given timely and cannot be altered to circumvent fee tolerance rules. Exam tip: Remember the core AIR/RESPA trio: no coercion, no undisclosed relationships, and strict adherence to provider list and fee tolerance rules.
Why This Is the Correct Answer
The correct response is "Disclose third-party charges in the proper category" because Third-party settlement services must avoid referral fees and follow provider-list/tolerance rules.
Why the Other Options Are Wrong
Option B: 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.
Option C: Treat a referral arrangement as acceptable because no borrower complained.
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: Change the provider list after the borrower chooses a service to avoid tolerance review.
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.
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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