Sec 1-Page 16

A mortgage broker enters into an arrangement with a local title company under which the title company pays the broker a “marketing bonus” for every borrower referred for closing services. The payments are not tied to any actual settlement services performed by the broker and are based solely on the number of referrals generated each month.

During a CFPB investigation, regulators conclude the arrangement violates RESPA Section 8.

Which statement best explains why?

A settlement service provider charges borrowers a document preparation fee and later shares a portion of that fee with another company that performed no actual settlement services in connection with the transaction. Internal emails show the payment was made primarily because the company referred borrowers to the settlement provider.

Regulators later determine the arrangement violated RESPA Section 8.

Why?

A mortgage lender repeatedly provides expensive sporting event tickets and vacation incentives to a real estate brokerage whose agents consistently refer borrowers to the lender. Although no written referral contract exists, regulators observe that the incentives increase whenever referral volume rises.

During a RESPA investigation, the lender argues there was never a formal agreement requiring referrals.

Which statement best reflects RESPA’s treatment of referral agreements?

A title company repeatedly provides “consulting fees” to a mortgage broker over several years. The payments increase substantially whenever the broker sends higher volumes of settlement business to the title company. During a CFPB examination, the title company claims the fees were simply goodwill payments and not evidence of a referral arrangement.

Why could regulators still determine a RESPA violation occurred?