A closing coordinator compares the file facts with RESPA Section 8 Kickbacks during an underwriting condition review. Which conclusion is accurate?
Correct Answer
B) Apply the escrow-account rule before changing charges
Why this is correct: RESPA Section 8 prohibits kickbacks and unearned fees, but it also contains specific rules for escrow accounts, including limits on cushion amounts and requirements for timely payments and analysis. When reviewing charges during underwriting, applying the escrow-account rules first ensures any changes to charges comply with these foundational requirements before other adjustments are considered. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because RESPA's escrow rules are federal law. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because escrow compliance is required at settlement. "Rely on oral agreement when the rule requires documented compliance" is wrong because escrow terms and any changes must be documented in writing, such as on the Closing Disclosure. Exam tip: RESPA's escrow rules are separate from its anti-kickback rules. Know that escrow has its own set of requirements for handling and disclosing funds.
Why This Is the Correct Answer
The correct response is "Apply the escrow-account rule before changing charges" 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 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
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
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?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
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?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
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?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
Before the team acts on a supervisory file review, a processor must address TILA Higher Priced Mortgage Loans. Which response is most defensible?
Next Question
The loan team compares the file facts with Fair Housing Act during an underwriting condition review. Which conclusion is accurate?