Question 1

What is the primary purpose of RESPA?

Accepted Answer

RESPA was enacted to provide consumers with better disclosures of settlement costs and to eliminate abusive practices such as kickbacks and referral fees. Its core rules appear in Regulation X, including Sections 6, 8, and 9 of RESPA.

Question 2

Which loan is generally covered by RESPA?

Accepted Answer

RESPA generally applies to federally related mortgage loans secured by 1-4 family residential property. It does not generally apply to business-purpose credit, temporary financing, or truly vacant land transactions.

Question 3

Which of the following is considered a settlement service under RESPA?

Accepted Answer

Appraisals are settlement services because they are provided in connection with a real estate settlement. RESPA broadly defines settlement services to include services such as title work, appraisals, inspections, loan origination, and closing services.

Question 4

An MLO refers every borrower to the same title company and receives a $150 gift card from that title company after each closing. Under RESPA, this arrangement is:

Accepted Answer

RESPA Section 8(a) prohibits giving or accepting any fee, kickback, or thing of value in exchange for referrals of settlement-service business. A gift card tied to each referral is a classic kickback, regardless of service quality or later disclosure.

Question 5

A mortgage broker charges a borrower a $395 'document review fee' and then splits that fee with another company that performed no actual work on the file. Which statement is most accurate?

Accepted Answer

RESPA Section 8(b) prohibits splitting charges except for services actually performed. Disclosing the charge does not cure an unearned fee, and licensing status does not make an unperformed service compensable.

Question 6

A borrower sends the servicer a written notice alleging that a payment was misapplied. Under RESPA, by when must the servicer generally provide a substantive response or correction?

Accepted Answer

Under Regulation X servicing rules, a servicer generally must investigate and respond to a notice of error within 30 business days, subject to limited extensions in some cases. The servicer also generally must acknowledge receipt within 5 business days.

Question 7

A borrower closes on a loan with an escrow account for taxes and insurance. By when must the servicer generally deliver the initial escrow account statement?

Accepted Answer

RESPA requires an initial escrow account statement at settlement or within 45 calendar days of settlement. The statement must show the estimated activity in the escrow account, including anticipated disbursements and monthly payments.

Question 8

An MLO owns 20% of an appraisal company and routinely refers applicants there. The MLO tells borrowers the appraiser is 'in-house' but never gives a written affiliated business arrangement disclosure. Borrowers are free to shop elsewhere. What is the best answer?

Accepted Answer

A lawful AfBA requires a written disclosure at or before the referral describing the relationship and estimated charges. Even if the borrower is not required to use the affiliate, failing to provide the AfBA disclosure can violate RESPA Section 8(c)(4).

Question 9

At closing, the settlement statement shows a $450 fee paid to 'ABC Review Services,' an affiliate of the lender. ABC performed no review, no processing, and no settlement work. Which answer is most accurate?

Accepted Answer

RESPA Section 8(b) prohibits charging or splitting a fee for services not actually performed. An affiliate relationship does not create an exception for unearned fees, and borrower signature does not make the charge lawful.

Question 10

A transferor servicer mails its servicing transfer notice 10 days before the effective date. The new servicer mails its notice 20 days after the effective date. Which statement is correct?

Accepted Answer

The transferor servicer generally must notify the borrower at least 15 days before the effective date, so 10 days is late. The transferee servicer generally must notify the borrower not more than 15 days after the effective date, so 20 days is also late.

RESPA Practice Questions

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