Exam MLO Topic 1 Question 27 Discussion

Actual exam question for NMLS's MLO exam
Question #: 27
Topic #: 1
In a federally related mortgage loan transaction, a charge for a settlement service by a person for which no services or nominal services are performed is prohibited:

Suggested Answer: A Vote an answer

Under RESPA (Real Estate Settlement Procedures Act), it is illegal to charge a fee for a settlement service if no services or only nominal services are performed. This is true regardless of who pays the fee, whether it's the borrower, seller, real estate agent, or any other party. RESPA prohibits unearned fees, kickbacks, or payments for referrals in federally related mortgage transactions.
* Even if someone other than the borrower pays, the charge is still illegal if it is not justified by actual services performed.
References:
* RESPA Section 8 - Prohibition on kickbacks and unearned fees
* CFPB RESPA Guidelines

by Cheryl at Jan 21, 2025, 02:48 AM

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