A processor asks how to handle a file where a settlement provider asks to be paid for a task it did not actually perform. Which response is most accurate?
Correct Answer
A) Pay only for actual, necessary, distinct services performed
Why this is correct: The most accurate response is based on 12 CFR 1024.14(g), which permits compensation to a settlement service provider only for "services actually performed." The core requirement is that any payment must be for actual, necessary, and distinct work. A request for payment for a task not performed directly violates this rule. Why the other choices are wrong: "Use the supervisory exam response as a reason to postpone the required compliance step" is wrong because exam findings do not justify postponing compliance with clear rules. "Skip the rule because the supervisory exam response appears routine" is wrong because no rule can be skipped based on perceived routine. "Assume professional conduct is outside compliance review because no fee has been charged yet" is wrong because the request itself triggers the need for compliant handling; professional conduct is integral to compliance. Exam tip: RESPA's "services actually performed" rule is a key defense against disguised kickbacks. Always verify the service was real.
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 B: Use the supervisory exam response as a reason to postpone the required compliance step.
Use the supervisory exam response as a reason to postpone the required compliance step. is not correct because it bypasses the rule supported by the explanation.
Option C: Skip the rule because the supervisory exam response appears routine.
Skip the rule because the supervisory exam response appears routine. is not correct because it bypasses the rule supported by the explanation.
Option D: Assume professional conduct is outside compliance review because no fee has been charged yet.
Assume professional conduct is outside compliance review because no fee has been charged yet. 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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