Loan Officer Federal Laws: RESPA Questions and Answers

Question 1

According to Section 8 of RESPA, which of the following is strictly prohibited?

Accepted Answer

A real estate agent requiring a buyer to use a specific title company in which the agent has an undisclosed ownership interest.

Answer

Section 8 of RESPA prohibits kickbacks, referral fees, and unearned fees. Requiring the use of an affiliated business without proper disclosure, and receiving a thing of value (the return on ownership interest tied to the referral) is a violation. Providing a list of approved providers is permissible, and charging for services rendered (like a title search or marketing services) is a legitimate business practice.

Question 2

A loan officer at a mortgage company has a close friend who is a real estate agent. The agent regularly sends clients to the loan officer. To show appreciation, the loan officer gives the agent a $100 gift card for every funded loan that the agent refers. This arrangement is a violation of which federal law?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Section 8 of RESPA prohibits giving or receiving a 'thing of value' in exchange for the referral of settlement service business. The $100 gift card is a 'thing of value' given specifically for the referral, which is a classic example of a prohibited kickback.

Question 3

Under RESPA, a lender is establishing a new escrow account for a borrower. The lender may collect a cushion at closing that is limited to what amount?

Accepted Answer

One-sixth of the estimated total annual disbursements.

Answer

RESPA limits the amount a lender can require a borrower to keep in an escrow account. The cushion is limited to an amount equal to one-sixth (or two months) of the total estimated annual disbursements from the account.

Question 4

Which of the following is NOT a primary purpose of the Real Estate Settlement Procedures Act (RESPA)?

Accepted Answer

To regulate the interest rates charged on mortgage loans.

Answer

RESPA's main goals are to ensure consumers receive timely disclosures about settlement costs, to eliminate kickbacks and referral fees that can inflate costs, and to regulate escrow accounts. Regulating the maximum interest rates on loans is a function of other laws, not RESPA.

Question 5

An Affiliated Business Arrangement (AfBA) disclosure must be provided to the consumer under RESPA:

Accepted Answer

At or before the time the referral is made.

Answer

For an affiliated business arrangement to be permissible under RESPA, the consumer must be given a written disclosure of the nature of the relationship and the estimated charges of the provider at or before the time of the referral.

Loan Officer Exam Practice Test

Loan Officer Exam Practice Test

Loan Officer Federal Laws: RESPA Questions and Answers