Real Estate Sales Exam Fair Housing and Disclosures 3 — Questions and Answers
Question 1: RESPA prohibits which of the following practices in real estate transactions?
- Charging origination fees
- Paying kickbacks for referrals between settlement service providers (Correct answer)
- Requiring title insurance
- Collecting prepaid interest at closing
Correct answer: Paying kickbacks for referrals between settlement service providers
RESPA Section 8 prohibits kickbacks and unearned fee-splitting arrangements between settlement service providers.
Question 2: A real estate agent learns that a home is located near a registered sex offender. In most states, the agent's disclosure obligation is governed by:
- The Fair Housing Act
- Megan's Law and state-specific disclosure requirements (Correct answer)
- RESPA
- The Americans with Disabilities Act
Correct answer: Megan's Law and state-specific disclosure requirements
Megan's Law established sex offender registries, and state laws vary on whether agents must proactively disclose proximity to registered offenders.
Question 3: Which of the following is NOT one of the original protected classes under the 1968 Fair Housing Act?
- Race
- Color
- Disability (Correct answer)
- Religion
Correct answer: Disability
Disability was added as a protected class in the Fair Housing Amendments Act of 1988, not the original 1968 Act.
Question 4: A seller discloses that the basement floods during heavy rain. This type of disclosure is an example of:
- Puffing
- A material fact disclosure (Correct answer)
- Misrepresentation
- Caveat emptor
Correct answer: A material fact disclosure
Known defects that could affect a buyer's decision, like flooding, are material facts that must be disclosed.
Question 5: The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against applicants based on:
- Credit score
- Loan-to-value ratio
- Race, color, religion, sex, national origin, marital status, or age (Correct answer)
- Employment history
Correct answer: Race, color, religion, sex, national origin, marital status, or age
ECOA prohibits credit discrimination based on protected characteristics including race, sex, national origin, marital status, and age.
Question 6: A listing agent has a duty to disclose to buyers that the seller is in foreclosure proceedings. This is because it is a:
- Personal matter protected by privacy laws
- Material fact that could affect the buyer's decision (Correct answer)
- Violation of the seller's confidentiality
- Responsibility of the buyer's agent only
Correct answer: Material fact that could affect the buyer's decision
Foreclosure proceedings are a material fact that affects the transaction and title, and must be disclosed to buyers.
Question 7: Blockbusting is best described as:
- Refusing to make loans in certain geographic areas
- Inducing homeowners to sell by predicting that minorities will move into the neighborhood (Correct answer)
- Directing buyers to specific neighborhoods based on race
- Charging higher rents to minority tenants
Correct answer: Inducing homeowners to sell by predicting that minorities will move into the neighborhood
Blockbusting (panic peddling) is the illegal practice of inducing owners to sell by suggesting that property values will decline due to minority groups moving in.
Real Estate Sales Exam Fair Housing and Disclosures 3
RESPA prohibits which of the following practices in real estate transactions?