during a RESPA servicing and affiliated-business rules review, a policy analyst identifies an issue involving RESPA servicing and affiliated-business rules. Which response is most compliant?
Correct Answer
A) Give the AFBA disclosure and avoid required use
Why this is correct: Section 8 of RESPA prohibits giving or accepting anything of value for referrals of settlement service business. An affiliated business arrangement (AfBA) is a permitted exception under Regulation X if specific conditions are met, including providing a written disclosure at or before the referral and not requiring the use of the affiliate. "Give the AFBA disclosure and avoid required use" directly aligns with these two key compliance requirements. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because RESPA's AfBA rules are federal law; internal policies cannot override mandatory federal disclosure and timing requirements. "Use prior quality-control approval as a substitute for the current RESPA Servicing Transfer requirement" is wrong because RESPA's servicing transfer rules require specific notices to borrowers; prior internal approvals do not satisfy this obligation. "Rely on oral agreement when the rule requires documented compliance" is wrong because RESPA's AfBA rules require written disclosures; oral agreements are insufficient. Exam tip: For RESPA AfBA questions, remember the two key compliance points: provide the written disclosure at or before referral, and never require the use of the affiliated service.
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 B: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Use prior quality-control approval as a substitute for the current RESPA Servicing Transfer requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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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