A settlement service provider proposes billing a $200 fee to be shared three ways among parties who each "touch" the file briefly. Compliance is asked what test the arrangement has to meet.
Correct Answer
B) Pay only for actual, necessary, distinct services performed
Why this is correct: The rule from 12 CFR 1024.14(g) is clear: payment to a settlement service provider is permitted only for "services actually performed." In a training scenario, the action that best follows this rule is to ensure payment is made solely for actual, necessary, distinct services. This upholds the ethical standard that compensation must match real work. Why the other choices are wrong: "Assume another jurisdiction approval automatically cures this file" is wrong because approval elsewhere does not override the specific RESPA requirement for actual services. "Handle professional conduct with a sales script rather than the required file action" is wrong because a script does not substitute for the mandatory action of refusing to pay for unperformed work. "Use the pre-closing review as a reason to postpone the required compliance step" is wrong because compliance cannot be postponed; the issue must be resolved when discovered. Exam tip: In training questions, the correct answer is the one that directly applies the black-letter rule, not a workaround.
Why This Is the Correct Answer
The correct response is "Pay only for actual, necessary, distinct services performed". The ethical and legal distinction is payment for real services, not a label or customary amount.
Why the Other Options Are Wrong
Option A: Assume another jurisdiction approval automatically cures this file.
Assume another jurisdiction approval automatically cures this file. is not correct because it bypasses the rule supported by the explanation.
Option C: Handle professional conduct with a sales script rather than the required file action.
Handle professional conduct with a sales script rather than the required file action. is not correct because it bypasses the rule supported by the explanation.
Option D: Use the pre-closing review as a reason to postpone the required compliance step.
Use the pre-closing review as a reason to postpone the required compliance step. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For RESPA fee questions, ask what service was actually performed.
Exam Tip
For RESPA fee questions, ask what service was actually performed.
Common Mistakes to Avoid
- -Renaming an unearned fee does not make it earned.
More Ethics & Fraud Questions
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
An MLO recommends a loan with a low initial payment that will increase sharply in two years. The borrower says retirement income will be fixed and asks whether the payment can change. What is the appropriate response?
An MLO alters a bank statement to make the applicant's account balance appear higher and submits it to underwriting. Which response is appropriate?
A branch manager asks about a loan file because marketing proposes a rate the company is not prepared to offer. What should happen?
A borrower wants cash for necessary home repairs. A proposed refinance provides $15,000 cash but adds $12,000 in costs and extends repayment by 15 years. What is the best next step for the MLO?
Before closing, the team discovers that an ad shows an interest rate but omits the APR presentation. What is the safest compliant answer?
The loan team is resolving Privacy and Confidentiality during a quality-control sample. Which action best fits the rule?
A house last sold for $185,000 in January. In March it changes hands 3 times in 9 days, reaching $410,000, with the same appraiser and the same closing agent on every leg. Assuming the parties colluded to inflate appraisals without improvements to support the higher prices, what fraud scheme does this pattern illustrate?
For closings involving federally related mortgage loans, a title company pays a real estate brokerage $75 for each referred client who closes. The brokerage only passes along the client’s name and number. Does this referral payment comply with RESPA Section 8?
Before closing, the team discovers that a loan officer wants different terms because of a protected applicant characteristic. What is the safest compliant answer?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
Before closing, the team discovers that a borrower asks whether the company will file a suspicious activity report. What is the safest compliant answer?
Next Question
An audit analyst compares the file facts with Conflicts of Interest during an underwriting condition review. Which conclusion is accurate?