During a training quiz scenario, a compliance analyst encounters an RESPA Prohibited Practices issue. Which response should decide how the file should be documented?
Correct Answer
A) Pay only for actual services performed
Why this is correct: A core RESPA RESPA's anti-kickback rule prohibition is against giving or accepting any fee, kickback, or thing of value for the referral of settlement service business. Payments are only allowed for "goods or facilities actually furnished" or "services actually performed." The correct response, "Pay only for actual services performed," is the fundamental principle that ensures compensation is for legitimate work, not for referrals, thereby avoiding illegal kickbacks. 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 rule is a strict prohibition with no exception for internal policies. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the rule must be followed in every transaction to avoid violations. "Rely on oral agreement when the rule requires documented compliance" is wrong because RESPA compliance, especially regarding service agreements and payments, requires proper documentation to prove services were actually rendered. Exam tip: The RESPA anti-kickback rule is simple: No payment for a referral. Payment must always be for real, proportional services.
Why This Is the Correct Answer
The correct response is "Pay only for actual services performed" because RESPA prohibits kickbacks and regulates escrow, servicing, and settlement-service practices.
Why the Other Options Are Wrong
Option B: 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 C: 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
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