A disclosure specialist compares the file facts with RESPA Servicing Requirements during a borrower follow-up call. Which conclusion is accurate?
Correct Answer
D) Give the AFBA disclosure and avoid required use
Why this is correct: RESPA prohibits kickbacks and unearned fees. A key rule for Affiliated Business Arrangements (AFBAs) requires that if a referral is made to an affiliated service provider, a specific AFBA disclosure must be given to the consumer. This disclosure must state that the consumer is not required to use the affiliated provider. The correct answer, "Give the AFBA disclosure and avoid required use," captures this requirement to provide the disclosure and not mandate the use of the affiliate. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because RESPA's anti-kickback and disclosure rules are federal law and cannot be overridden internally. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because required disclosures must be provided timely, not upon inquiry. "Use the ability-to-repay standard to decide the RESPA Servicing Requirements issue before confirming the trigger facts" is wrong because ability-to-repay is an underwriting standard unrelated to RESPA's servicing or affiliation disclosure rules. Exam tip: For RESPA, remember the AFBA disclosure must be given when a referral is made to an affiliate, and the consumer cannot be required to use that affiliate.
Why This Is the Correct Answer
The correct response is "Give the AFBA disclosure and avoid required use" because RESPA/Regulation X limits referral value and sets servicing disclosure and response duties.
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 B: 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 C: Use the ability-to-repay standard to decide the RESPA Servicing Requirements issue before confirming the trigger facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
RESPA servicing and affiliated-business rules: 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 servicing and affiliated-business rules; 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
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