A mortgage file is paused during a secondary-market screen because of RESPA Section 8 Prohibitions. Which answer should decide how the file should be documented?
Correct Answer
D) Reject the kickback or unearned-fee arrangement
Why this is correct: RESPA Section 8 explicitly prohibits giving or accepting any fee, kickback, or thing of value for the referral of settlement service business. It also bans fees for which no actual service is performed. Therefore, the only compliant action when such an arrangement is identified is to "Reject the kickback or unearned-fee arrangement." Why the other choices are wrong: Using an internal exception is illegal, as RESPA Section 8 is a strict prohibition. Waiting for a regulator to ask is not an option; the prohibition is immediate and absolute. Relying on an oral agreement is irrelevant and non-compliant, as the arrangement itself is unlawful regardless of documentation. Exam tip: RESPA Section 8 is a bright-line rule: no kickbacks, no unearned fees. The correct answer is always to reject, avoid, or disclose (for permitted AfBAs) such arrangements.
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: 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 B: 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 C: 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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