Federal Mortgage LawsQuestion 30 of 400
A lender owns a partial interest in the title company it refers borrowers to. Under RESPA, this affiliated business arrangement is permitted only if:
a.The lender pays the borrower a bonus
b.The referral is kept secret from the borrower
c.The borrower is required to use the affiliated company
d.The relationship is disclosed, the borrower is not required to use the affiliate, and the only thing of value received is a return on ownership interest
Explanation
RESPA permits affiliated business arrangements only when the arrangement is disclosed in writing, the consumer is not required to use the affiliated provider (except in limited cases), and no thing of value passes other than a return on the ownership interest. Secret referrals, mandatory use, or bonus payments would violate Section 8. Disclosure plus voluntariness is essential.
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