A closing coordinator compares the file facts with Dodd Frank Appraisal Independence during an underwriting condition review. Which conclusion is accurate?
Correct Answer
C) Do not accept value for third-party referrals
Why this is correct: The Real Estate Settlement Procedures Act (RESPA) RESPA's anti-kickback rule prohibits giving or accepting any fee, kickback, or thing of value for the referral of settlement service business. This is a strict anti-kickback rule. The correct answer, "Do not accept value for third-party referrals," is a clear and direct statement of this prohibition. Why the other choices are wrong: "Tell the borrower shopping is allowed while making the affiliate provider mandatory" is wrong because if a provider is mandatory (e.g., an affiliated business arrangement), the borrower cannot truly shop, and the required disclosures about the affiliation must be made. "Leave provider charges undisclosed until the final Closing Disclosure" is wrong because charges for services must be disclosed on a Loan Estimate within three business days of application, not held until the end. "Require a preferred provider and still treat the borrower as having shopped" is wrong because requiring a specific provider negates shopping, and misrepresenting that choice is deceptive. Exam tip: Remember RESPA RESPA's anti-kickback rule's core rule: No payment for referrals. Even a gift or a fee split for sending business to a title company or appraiser is illegal.
Why This Is the Correct Answer
The correct response is "Do not accept value for third-party referrals" because Third-party settlement services must avoid referral fees and follow provider-list/tolerance rules.
Why the Other Options Are Wrong
Option A: Tell the borrower shopping is allowed while making the affiliate provider mandatory.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Option B: Leave provider charges undisclosed until the final Closing Disclosure.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Option D: Require a preferred provider and still treat the borrower as having shopped.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Memory Technique
third-party settlement-service controls: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For third-party settlement-service controls questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
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 Origination Questions
Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
An MLO is reviewing procedures for a case where a cost changes after the Closing Disclosure has already been provided. What is the proper handling?
During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
A construction-to-permanent loan will disburse in 5 draws over 11 months before the permanent phase begins. Which Regulation Z appendix provides a disclosure method for multiple-advance construction transactions?
Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
A construction loan agreement allows advances only after documented completion of specified work. A builder requests the next draw, but no completion evidence has been provided. What should occur?
Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
A construction-to-permanent loan will convert to a substantially higher fully amortizing payment. Which payment is especially important when assessing the borrower's long-term repayment capacity?
A construction-to-permanent note states that conversion requires completion, a certificate of occupancy, and no unresolved liens. Construction is finished, but a mechanic's lien remains. What should happen?
A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
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