Which of the following practices is prohibited under RESPA Section 8 in a federally related mortgage transaction?
Correct Answer
B) A title company paying a real estate broker a fee each month in exchange for directing clients to that title company
RESPA Section 8 (12 U.S.C. § 2607) expressly prohibits any person from giving or accepting any fee, kickback, or thing of value in exchange for the referral of settlement service business related to a federally related mortgage loan. A title company paying a broker a monthly fee for client referrals is a textbook kickback arrangement and is unlawful under this provision.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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