An MLO is reviewing procedures for a case where a title company offers a gift card for each borrower referral. What is the proper handling?
Correct Answer
A) Refuse the referral fee because no service is performed
Lines 244-249; 12 CFR 1024.14(b). A thing of value for a referral is prohibited even if the borrower charge does not increase. Therefore, the correct response is "Refuse the referral fee because no service is performed".
Why This Is the Correct Answer
The correct response is "Refuse the referral fee because no service is performed". A thing of value for a referral is prohibited even if the borrower charge does not increase.
Why the Other Options Are Wrong
Option B: Use an informal exception and leave the required record unchanged.
Use an informal exception and leave the required record unchanged. is not correct because it bypasses the rule supported by the explanation.
Option C: Let production goals override the required verification, disclosure, license, or record step.
Let production goals override the required verification, disclosure, license, or record step. is not correct because it bypasses the rule supported by the explanation.
Option D: Apply the rule only after a regulator asks specifically about TRID timing and fee disclosure.
Apply the rule only after a regulator asks specifically about TRID timing and fee disclosure. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
Gift, split, bonus, or credit tied to referrals should trigger RESPA Section 8.
Exam Tip
Gift, split, bonus, or credit tied to referrals should trigger RESPA Section 8.
Common Mistakes to Avoid
- -No borrower overcharge is not a defense to a referral-fee arrangement.
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