RESPA PrepXl Flashcards
Which of the following is NOT true about an Affiliated Business Arrangement Disclosure Statement?
A.It must be provided to the prospective borrower at or before the time a third-party service provider referral is made
B.It must specify the nature of any relationship between a settlement service provider and the referring licensee
C.The disclosure may be provided instead of the list of third-party service providers from which the borrower can shop for services
D.A person that has a 2% interest in a settlement service provider to which the person is referring a borrower has an affiliated business arrangement with the referred-to entity
The answer is : the disclosure may be provided instead of list of third-party service providers from which the borrower can shop for services.
An affiliated business arrangement is an arrangement in which a person is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or a direct or beneficial ownership interest of more than 1% in, a provider of settlement services and refers business to, or influences the selection of, that provider. The Affiliated Business Arrangement Disclosure Statement must be provided on a separate piece of paper to the borrower at or before the time of a face-to-face referral or a referral made in writing or by electronic media, within three business days of a telephone referral, or, if referred by the lender, at the time the Loan Estimate is provided.
Which of the following would most likely not be considered a federally-related mortgage loan as defined by RESPA?
A.Hard money, privately-placed loan
B.Subprime loan
C.FHA loan
D.Conventional loan
The answer is hard money, privately-placed loan.
Federally-related mortgage loans include FHA, VA, or other government-sponsored loans and most conventional loans, purchase loans, assumptions, refinances, and reverse mortgages, and subordinate lien loans. A private mortgage loan would not be considered a federally-related mortgage loan.
Which of the following circumstances is least likely to lead to a determination that two entities are operating a sham affiliated business arrangement under RESPA?
A.The same person owns both entities
B.One entity shares office space with the other entity
C.One entity’s business comes exclusively from referrals from another entity
D.Both entities share the same employees
The answer is the same person owns both entities.
An affiliated business arrangement is an arrangement in which a person or his or her associate is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or ownership interest of more than 1% in, a provider of settlement services and refers business to or influences the selection of that provider. As ownership in an affiliated business is part of the definition of an affiliated business relationship, such ownership does not necessarily point to a sham operation.
According to RESPA, when would fee splitting be allowed?
A.Never
B.If all parties are licensed
C.If all parties render a service
D.If all parties are employed by different companies
The answer is: if all parties render a service.
A settlement service provider may charge a borrower a fee only for work performed.
RESPA and Regulation X prohibit fee-splitting and receiving unearned fees for services not actually performed. No person may give and no person may accept any portion, split, or percentage of any fee for the rendering of a settlement service in connection with a transaction involving a federally-related mortgage loan unless it is for services actually performed.
A borrower receives a document which contains a list of all closing costs, a disclosure of the borrower credits received on the transaction, an estimate of the cash the borrower needs to bring in to closing, and the sales price. Which of the following best identifies this document?
A.Loan Closure
B.Closing Disclosure
C.Itemization of Amount Financed
D.Loan Estimate
The answer is Loan Estimate. The Loan Estimate provides an “estimate” only of closing costs. The Closing Disclosure sets forth the” actual” costs of the subject mortgage lending transaction in a clear and understandable manner.
Which of the following is not considered one of the six essential pieces of information constituting an application under RESPA?
A.Borrower Social Security Number
B.Loan program
C.Borrower monthly income
D.Loan amount
The answer is loan program. The six essential pieces of a loan application are the borrower’s name, Social Security Number and income, the address of the property which will act as collateral for the loan, the estimated value of the property, and the amount of the loan sought. The loan product for which the applicant is applying is NOT an essential piece of an application.
