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Question 1 of 4

1. Question
A mortgage lender owns 15% of a title company that regularly handles closings for the lender’s borrowers. Loan officers consistently encourage applicants to use the title company during the loan process. During a RESPA compliance audit, regulators review whether this arrangement qualifies as an affiliated business arrangement.

Which statement best describes one of the elements required for a controlled or affiliated business arrangement under RESPA?
- A) The lender must own at least 51% of the settlement service provider
- B) The referring party or associate must have an affiliate relationship or ownership interest of more than 1% in the settlement service provider
- C) The settlement provider must be a federally chartered institution
- D) The referral arrangement applies only to government-insured mortgage loans
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Question 2 of 4

2. Question
A real estate broker repeatedly directs homebuyers to a specific escrow company partially owned by the broker’s business partner. Borrowers are told that using the escrow company will help the transaction move faster, and most customers follow the recommendation.

Regulators later investigate whether the broker affirmatively influenced the selection of a settlement service provider.

Which action would satisfy the referral component of a controlled business arrangement?
- A) Allowing borrowers to independently select any provider without recommendation
- B) Providing a neutral alphabetical list of local settlement providers
- C) Explaining only general closing procedures without discussing providers
- D) Directly or indirectly referring business to a provider or affirmatively influencing the borrower’s selection of that provider
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Question 3 of 4

3. Question
A mortgage company refers borrowers to an affiliated appraisal management company owned by one of its principals. During a CFPB examination, investigators discover that borrowers were never given written disclosure explaining the ownership relationship or estimated settlement charges.

Which disclosure requirement applies when a controlled business arrangement exists?
- A) The referring party must provide written disclosure describing the relationship and estimated charges to the borrower
- B) Disclosure is required only after the loan closes
- C) Oral disclosure alone satisfies affiliated business arrangement requirements
- D) Estimated settlement charges are not required if the provider is partially owned by the lender
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Question 4 of 4

4. Question
A borrower applying for a federally related mortgage loan is informed that the lender prefers to use its affiliated title company for settlement services. However, the borrower wants to select another title provider. The loan officer states that using another company may delay approval.

During a RESPA review, regulators question whether the borrower was properly informed of their rights.

Which statement correctly reflects the disclosure requirement for affiliated business arrangements?
- A) Borrowers must use affiliated settlement providers whenever ownership exceeds 1%
- B) Lenders may require affiliated providers if the relationship is disclosed verbally
- C) Borrowers must be informed that they are not required to use the affiliated settlement service provider as a condition of the loan
- D) Borrowers may select another provider only after signing the Closing Disclosure
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