A quality-control reviewer flags a case because a title company offers a gift card for each borrower referral. What correction is appropriate?
Correct Answer
B) Refuse the referral fee because no service is performed
Why this is correct: The Real Estate Settlement Procedures Act (RESPA) RESPA's anti-kickback rule (the governing federal rule prohibits giving or accepting any fee, kickback, or thing of value (like a gift card) for the referral of settlement service business. This applies even if the cost to the borrower does not increase. The original explanation states that such a referral fee is prohibited. Therefore, "Refuse the referral fee because no service is performed" is the appropriate correction, as the title company is offering compensation solely for referrals, not for actual services rendered. Why the other choices are wrong: "Apply the rule only after a regulator asks specifically about TRID timing and fee disclosure" is incorrect because RESPA violations are not contingent on regulatory inquiry; the rule applies immediately. "Treat the rule as waived because all parties want the file to move faster" is wrong because parties cannot waive this consumer protection statute. "Assume another jurisdiction approval automatically cures this file" is prohibited because RESPA is a federal law; local approvals do not override it. Exam tip: No referral fees for settlement services, ever. If no actual service is performed, it's a prohibited kickback.
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 A: 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.
Option C: Treat the rule as waived because all parties want the file to move faster.
Treat the rule as waived because all parties want the file to move faster. is not correct because it bypasses the rule supported by the explanation.
Option D: Assume another jurisdiction approval automatically cures this file.
Assume another jurisdiction approval automatically cures this file. 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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