The Real Estate Settlement Procedures Act (RESPA) is a consumer disclosure and anti-kickback statute designed to inform consumers of their settlement costs and to prohibit kickbacks that can increase the cost of obtaining a mortgage. Take this quiz to find out how well you know about this important issue to stay on the right side of the law.
Which of the following is NOT a settlement service that is covered by RESPA?
Under RESPA, a real estate professional may give in return for the referral of real estate settlement service business:
To provide consumers with cost information about the mortgage process, RESPA created the good faith estimate (GFE) and the HUD-1 closing document. RESPA requires that the HUD-1 form be provided to the:
Substantially revised versions of the GFE and HUD-1 took effect at the beginning of 2010. Among other things, HUD's goal was to reduce surprises to consumers at the closing table by restricting how much some costs could change between the GFE and the HUD-1. What is included among the costs that are allowed to change?
In addition to reducing consumer surprises at the closing table, the revised GFE and HUD-1 are intended to make comparison shopping easier for consumers. To do that, the GFE lets consumers look at a proposed loan under all but one of these different scenarios:
To combat higher costs in real estate transactions, Section 8 of RESPA makes it a criminal act for settlement service providers to pay fees for the referral of business. One exception to this rule allows a real estate professional to pay a referral fee to:
Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
RESPA allows title companies to provide real estate professionals:
Two companies that provide settlement services and have some degree of common ownership are considered affiliated businesses under RESPA. When there is a referral from one of these companies to the other, RESPA requires the customer receive an affiliated business disclosure that contains specific information, including:
The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
RESPA is interpreted and enforced by the:
The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is: