The branch manager is resolving TILA RESPA Integrated Disclosure during an internal audit sample. Which action best fits the rule?
Correct Answer
A) Pay third parties only for services actually performed
The Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks, referral fees, and unearned fees for settlement services. A lender or MLO may only pay a third-party provider for services actually performed. Provider lists must be given to borrowers without bias, and tolerance rules limit how much estimated costs can increase. Why this is correct: "Pay third parties only for services actually performed" is a direct application of RESPA's core prohibition against giving or accepting any fee, kickback, or thing of value pursuant to an agreement for the referral of business. Why the other choices are wrong: "Treat a referral arrangement as acceptable because no borrower complained" is wrong because RESPA violations are based on the act itself, not on whether a complaint was filed; the law prohibits referral fees regardless of borrower awareness. "Change the provider list after the borrower chooses a service to avoid tolerance review" is wrong because manipulating the list to avoid tolerance rules is deceptive and violates the requirement to provide a good faith estimate of costs. "Collect a fee from the provider for sending the borrower to that service" is wrong because this is a classic illegal referral fee under RESPA RESPA's anti-kickback rule. Exam tip: Remember RESPA's mantra: "No fee for a referral." Payment must always be for bona fide, actually performed services at a reasonable rate.
Why This Is the Correct Answer
The correct response is "Pay third parties only for services actually performed" because Third-party settlement services must avoid referral fees and follow provider-list/tolerance rules.
Why the Other Options Are Wrong
Option B: Treat a referral arrangement as acceptable because no borrower complained.
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 C: Change the provider list after the borrower chooses a service to avoid tolerance review.
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: Collect a fee from the provider for sending the borrower to that service.
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
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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?
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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?
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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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