Definition of Terms Related to RESPA

Question 1

Affiliated business arrangement:

Answer 1

when service providers have a business relationship and an ownership interest in other settlement service providers.

example, a mortgage company may
have an ownership interest in a title company.

Question 2

Agreement or understanding:

Answer 2

an agreement or understanding for the referral of business related to settlement services.

Question 3

Bona fide discount point:

Answer 3

discount points paid by the borrower which reduce the interest rate.

Question 4

Borrower credit:

Answer 4

a fee paid to the borrower by the lender when a loan is originated at a higher interest rate than the lowest rate for which the borrower qualifies.

historically referred to as “yield spread premium” (YSP)

Question 5

Fee-splitting and kickbacks:

Answer 5

the terms are generally understood to refer to paying or accepting unearned fees, or marking up the fee for a particular settlement service and splitting the overage with another settlement service provider.

Question 6

Markups:

Answer 6

an upcharge in the actual cost of a settlement service and retention of the additional
fee.

Question 7

Mortgage broker:

Answer 7

a person, other than an employee of a lender, that renders origination services and serves as an intermediary between a borrower and a lender in a transaction that involves a federally-related mortgage loan.

This includes persons that close loans in their own name in table-funded transactions.

Question 8

Referral:

Answer 8

an action, either written or oral, that influences the selection of a provider of a settlement service.

Question 9

Settlement service:

Answer 9

service providers to prepare for closing.

examples of settlement service - appraisers, inspectors, credit reporting agencies, title insurers, and loan processors…

Question 10

Sham affiliated business arrangement:

Answer 10

a partnership or joint venture created between settlement service providers for the illegal purpose of splitting fees under the guise of a bona fide affiliated business arrangement.

Question 11

Thing of value:

Answer 11

this term includes, but is not limited to, any payment, advance, loan, or service

including money, discounts, commissions, salaries, stock, opportunities to participate in a money-making program, tickets to theatre or sporting events, services at special rates, and trip sat another’s expense.

This term also covers special financial arrangements, such as distributions
of partnership profits, increased equity in a company, special banking terms, or the reduction of existing debt.

The regulations state that the term “payment” is “synonymous with the giving or
receiving of any ‘thing of value’ and does not require transfer of money”