A record-retention audit raises a question about RESPA and Regulation X. Which action should the audit analyst recommend?
Correct Answer
B) Reject the kickback or unearned-fee arrangement
Why this is correct: RESPA's anti-kickback rule prohibits giving or accepting any fee, kickback, or thing of value for referrals of settlement service business. A core principle is that payments must be for actual, necessary services performed. A "fee split" with no work performed is a classic illegal kickback. The correct action, "Reject the kickback or unearned-fee arrangement," directly enforces this prohibition. Why the other choices are wrong: "Assume the RESPA Affiliated Business Arrangements condition is met because the borrower satisfied the separate income calculation requirement" is wrong because RESPA's affiliated business arrangement rules are separate from anti-kickback rules and have specific disclosure requirements; income calculation is irrelevant. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance is mandatory and proactive, not delayed until a regulator inquiry. "Rely on oral agreement when the rule requires documented compliance" is wrong because RESPA and Regulation X often require written disclosures and agreements; oral agreements do not satisfy this. Exam tip: Remember that RESPA's anti-kickback rule is a strict prohibition—no exceptions for borrower actions or oral agreements.
Why This Is the Correct Answer
The correct response is "Reject the kickback or unearned-fee arrangement" because RESPA prohibits kickbacks and regulates escrow, servicing, and settlement-service practices.
Why the Other Options Are Wrong
Option A: Assume the RESPA Affiliated Business Arrangements condition is met because the borrower satisfied the separate income calculation requirement.
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 and Regulation X: 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 and Regulation X; 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
More Federal Laws Questions
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A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
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An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
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