Two mortgage companies create a joint venture to provide settlement services, with each company owning 50% and referring their borrowers to the joint venture. To comply with RESPA Section 8 AfBA requirements:
Correct Answer
B) Borrowers must be given written disclosure and cannot be required to use the joint venture
Under RESPA's AfBA safe harbor, joint venture arrangements must provide proper written disclosure to borrowers and cannot require borrowers to use the affiliated entity's services. Equal profit distribution and below-market pricing are not required under RESPA.
Why This Is the Correct Answer
Under RESPA's AfBA safe harbor, joint venture arrangements must provide proper written disclosure to borrowers and cannot require borrowers to use the affiliated entity's services. Equal profit distribution and below-market pricing are not required under RESPA.
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A borrower's refinance loan documents contain an error in the Notice of Right to Cancel form showing the wrong rescission deadline date. The form shows the deadline as Thursday when it should be Friday. What is the effect?