During a borrower intake review, the supervisor encounters an RESPA Kickbacks and Referral Fees issue. Which response should choose the compliant next step?
Correct Answer
C) Handle the servicing request under Regulation X timing
Why this is correct: RESPA (Real Estate Settlement Procedures Act) prohibits kickbacks and unearned fees for referrals of settlement service business. Regulation X implements RESPA and sets specific rules for servicing transfers, including required notices and strict timelines for borrower inquiries and error resolution. The correct action is to handle the servicing request according to these Regulation X timing rules, ensuring the borrower receives notices and responses within the legally mandated periods. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal company policies cannot override federal law. "Wait until a regulator asks for the file before applying the federal requirement" is non-compliant as RESPA requirements are mandatory and proactive. "Rely on oral agreement when the rule requires documented compliance" is incorrect because RESPA and Regulation X often require written disclosures and records. Exam tip: For RESPA servicing issues, immediately think of Regulation X's specific timing rules for notices and borrower requests.
Why This Is the Correct Answer
The correct response is "Handle the servicing request under Regulation X timing" because RESPA prohibits kickbacks and regulates escrow, servicing, and settlement-service practices.
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 D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
RESPA and Regulation X: 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 and Regulation X; 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
More Federal Laws Questions
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
A mortgage team asks a branch supervisor about TILA APR and finance-charge rules during a renewal checklist. Which answer should guide the file?
A mortgage file is paused during a risk-control review because of TILA QM DTI Calculation. Which answer should choose the most defensible file action?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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