Under RESPA, which practice is prohibited?

Under RESPA, which practice is prohibited?

• A. Paying or receiving kickbacks for referrals
• B. Disclosing closing costs to borrowers
• C. Prohibiting the use of any third-party settlement service providers
• D. Guaranteeing identical closing costs for all borrowers

Answer: (B)

Kickbacks for referrals are illegal under RESPA. The rule bars paying or receiving anything of value in exchange for referrals of settlement services, and it applies to lenders, real estate brokers, title companies, appraisers, and others involved in the settlement process. This protection keeps consumers from inflated or biased charges and ensures settlement service choices aren’t influenced by improper incentives. Disclosing closing costs to borrowers is not prohibited—it’s required to be disclosed. RESPA doesn’t ban all third-party providers, but it does prohibit requiring use of a particular provider and prohibits kickbacks; the idea of guaranteeing identical closing costs for all borrowers isn’t the issue RESPA addresses.

Kickbacks for referrals are illegal under RESPA. The rule bars paying or receiving anything of value in exchange for referrals of settlement services, and it applies to lenders, real estate brokers, title companies, appraisers, and others involved in the settlement process. This protection keeps consumers from inflated or biased charges and ensures settlement service choices aren’t influenced by improper incentives. Disclosing closing costs to borrowers is not prohibited—it’s required to be disclosed. RESPA doesn’t ban all third-party providers, but it does prohibit requiring use of a particular provider and prohibits kickbacks; the idea of guaranteeing identical closing costs for all borrowers isn’t the issue RESPA addresses.