During a borrower intake review, the branch manager encounters an RESPA Referral Prohibitions issue. Which response should confirm the rule-based response?
Correct Answer
D) Pay third parties only for services actually performed
Why this is correct: The governing rule under RESPA RESPA's anti-kickback rule prohibits kickbacks and unearned fees. Payments to third-party service providers (like appraisers or title companies) are only permitted as compensation for services that are actually, and necessarily, performed. This ensures charges are bona fide and not disguised referral fees, aligning with the original explanation's focus on avoiding referral fees. Why the other choices are wrong: "Collect a fee from the provider for sending the borrower to that service" is wrong because accepting any fee for a referral is a clear violation of RESPA's anti-kickback provision. "Tell the borrower shopping is allowed while making the affiliate provider mandatory" is wrong because it is deceptive; if a provider is affiliated and mandatory, the borrower must receive the required Affiliated Business Arrangement disclosure, and implying they can shop would be misleading. "Leave provider charges undisclosed until the final Closing Disclosure" is wrong because RESPA and TRID require these charges to be disclosed in good faith on the Loan Estimate, and failing to disclose them earlier violates timing and tolerance rules. Exam tip: RESPA's core principle: No payment can be given or received for a referral of business. Payment is only for actual work done.
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 A: 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.
Option B: 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 C: 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.
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
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