Chapter 24 — Self-Check Quiz

RESPA and TILA: Disclosure, Kickbacks, and the Rules That Shape Every Referral

Twenty-six questions. Multiple choice items are written in the style of the SAFE MLO test, including the distractors that test whether you merged two rules. Short-answer items ask for the reasoning the exam cannot test but your career will.

Answer key at the bottom, in a collapsed block. Write your answers before you open it.

Multiple choice

1. RESPA's Section 8 prohibits giving or accepting a thing of value pursuant to an agreement or understanding for the referral of settlement service business. Which of the following defeats a Section 8(a) claim?

A. The consumer's total settlement charges did not increase B. The payment was made from the loan officer's personal funds C. There was no agreement or understanding, and nothing of value moved D. The referring party disclosed the arrangement to the borrower in writing

2. Under Regulation X, an agreement or understanding for the referral of settlement service business:

A. must be in writing to be enforceable against the parties B. must be at least verbalized between the parties C. may be established by a practice, pattern, or course of conduct D. exists only where the payment is expressly calculated per file

3. A loan officer pays a real estate brokerage \$1,200 a month under a marketing services agreement. Which fact is most damaging to the arrangement?

A. The brokerage refers the loan officer roughly four files a month B. The fee was reduced to \$700 in a quarter when referrals fell C. The agreement is not signed by the brokerage's managing broker D. The loan officer's competitor pays a different brokerage more

4. Which of the following is a permitted payment under RESPA Section 8(c)?

A. A \$300 payment to a real estate agent for each closed referral B. A cooperative brokerage and referral arrangement between real estate agents and brokers C. A monthly fee to a referral source calculated as a percentage of loan volume D. Free listing photography provided to a referring agent

5. An affiliated business arrangement is exempt from Section 8 only if all of the following are true EXCEPT:

A. the relationship is disclosed at or prior to the time of referral B. the consumer is not required to use the affiliated provider C. the only thing of value received is a return on ownership interest D. the affiliated provider's charges are lower than the market average

6. A referring party may require the use of which of the following notwithstanding RESPA's no-required-use condition?

A. A title insurance company B. A homeowners insurance agency C. An appraiser chosen to represent the lender's interest D. A settlement agent affiliated with the referring brokerage

7. RESPA Section 9 prohibits:

A. a lender from requiring a particular title company B. a real estate agent from recommending a title company C. a seller from requiring, as a condition of sale, that the buyer purchase title insurance from a particular company D. any party from receiving a fee for a title referral

8. The remedy for a Section 9 violation is:

A. rescission of the purchase contract B. three times all charges made for the title insurance, payable to the buyer C. a civil money penalty payable to the CFPB D. voiding of the title policy

9. Which of the following charges on a purchase loan is a finance charge under Regulation Z?

A. The appraisal fee B. The credit report fee C. The loan origination charge D. The owner's title insurance policy premium

10. Borrower-paid monthly mortgage insurance is:

A. excluded from the finance charge as a third-party charge B. included in the finance charge because it protects the creditor against the consumer's default C. excluded if the consumer may choose the mortgage insurer D. included only on FHA loans

11. The amount financed is:

A. the loan amount B. the loan amount plus closing costs C. the loan amount less prepaid finance charges D. the total of payments less the down payment

12. A loan has a note rate of 6.625% and an APR of 7.253%. The most complete explanation of the gap is:

A. the borrower's closing costs B. the origination charge, discount points, prepaid interest, and mortgage insurance C. the lender's profit margin on the loan D. the difference between simple and compound interest

13. Which of the following would NOT be a permissible reason for the APR to differ from the note rate?

A. Discount points paid at closing B. Prepaid interest collected at closing C. Mortgage insurance premiums payable monthly D. The property survey fee, if bona fide and reasonable

14. HOEPA high-cost mortgage status can be triggered by:

A. the APR test only B. the APR test or the points-and-fees test only C. the APR test, the points-and-fees test, or the prepayment penalty test D. the debt-to-income ratio only

15. Which requirement applies to a high-cost mortgage but NOT to a higher-priced mortgage loan?

A. An escrow account for property taxes B. A written appraisal with an interior inspection C. Homeownership counseling from a HUD-approved counselor before the loan is made D. Delivery of a copy of the appraisal to the applicant

16. A first-lien higher-priced mortgage loan generally requires:

A. a prohibition on balloon payments B. an escrow account for property taxes and mortgage-related insurance premiums C. a maximum 43% debt-to-income ratio D. mandatory pre-loan counseling

17. High-cost and higher-priced status are both measured against:

A. the prime rate B. the note rate on comparable loans C. the average prime offer rate for a comparable transaction, as of the date the rate is set D. the fully indexed rate

18. The Ability-to-Repay rule requires a creditor to consider the consumer's income or assets:

A. as stated by the consumer on the application B. other than the value of the dwelling that secures the loan C. including the projected appreciation of the property D. only where the loan is not a Qualified Mortgage

19. Under the current General Qualified Mortgage definition, the 43% debt-to-income limit was:

A. raised to 50% B. retained but made subject to compensating factors C. removed and replaced with a price-based test keyed to the loan's APR relative to the average prime offer rate D. eliminated along with any requirement to consider debt-to-income

20. A Qualified Mortgage that is a higher-priced covered transaction receives:

A. a safe harbor B. a rebuttable presumption of compliance with the Ability-to-Repay rule C. no presumption at all D. an exemption from the Ability-to-Repay rule

21. Which of the following is a triggering term under Regulation Z's closed-end advertising rule?

A. "No closing costs" B. "Easy monthly terms" C. "\$1,847 per month" D. "FHA financing available"

22. Regulation N — the MAP Rule — prohibits:

A. advertising a rate lower than a competitor's B. any material misrepresentation, express or implied, in a commercial communication regarding any term of a mortgage credit product C. all mailings to consumers who have applied elsewhere D. quoting an interest rate without a rate lock

23. RESPA and TILA are enforced by the CFPB. Rulemaking authority for RESPA was transferred to the CFPB from:

A. the Federal Reserve Board B. the Department of Housing and Urban Development C. the Federal Trade Commission D. the Federal Housing Finance Agency

Short answer

24. CFPB Bulletin 2015-05 addressed marketing services agreements and was later rescinded. What replaced it, and what is the practical instruction a loan officer should take from that sequence?

25. Regulation X § 1024.14(c) states that the value of the referral itself may not be taken into account in determining whether a payment exceeds the reasonable value of goods, facilities, or services. Explain why that provision, more than any other, is the one that catches real marketing arrangements — and give the sentence a loan officer must never write in an email.

26. On the Linden Street file, closing costs total \$9,720.25, of which \$5,564.25 are finance charges. Name the three closing-cost items in that \$5,564.25, add the fourth prepaid finance charge, and state the resulting amount financed. Then explain in one sentence why the appraisal, title, survey, and pest inspection are not in the APR.

Answer key — open only after you have written your answers **1. C.** The three elements are a thing of value, an agreement or understanding, and a referral. Knock out any one and there is no 8(a) violation. A is expressly irrelevant under Regulation X § 1024.14(g)(2) — it does not matter that the consumer's charges did not rise. B is not a defense; Section 8 reaches "any person," including you personally. D is not a defense either: disclosure cures a Section 8 problem only inside the affiliated business arrangement safe harbor, and only together with the other two conditions. **2. C.** Regulation X § 1024.14(e). The agreement need not be written or verbalized. Repeated receipt of a thing of value connected in any way to the volume or value of referrals is itself evidence of an agreement. "We never discussed it" is a talking point, not a defense. **3. B.** A fee that moves when referrals move is compensation for referrals. A alone is neutral — receiving referrals from a marketing counterparty is not unlawful. C is a contract-formality question, not a RESPA question. D is irrelevant. **4. B.** Cooperative brokerage and referral arrangements between real estate agents and brokers are expressly permitted under Section 8(c) — which is why a commission split between a listing broker and a buyer's broker is lawful. A is a referral fee. C prices the payment by referral volume. D is a thing of value defraying a referral source's own expense. **5. D.** The three conditions are disclosure, no required use, and return on ownership interest only. Nothing in RESPA requires the affiliate's prices to be competitive — which is precisely why the disclosure tells the consumer they are free to shop. **6. C.** The exceptions cover an attorney, a credit reporting agency, and an appraiser chosen to represent the lender's interest. Title insurance for the borrower is not among them. **7. C.** Section 9 restricts **the seller**, as a condition of **sale**, regarding **title insurance** purchased by the **buyer**. Every other option describes conduct governed by a different rule or by no rule at all. **8. B.** Three times all charges made for the title insurance, running to the buyer. **9. C.** The origination charge is a finance charge. Appraisal, credit report, and title insurance premiums are excluded under § 1026.4(c)(7) if bona fide and reasonable. **10. B.** § 1026.4(b)(5) — premiums for insurance protecting the **creditor** against the consumer's default are finance charges. Contrast property (hazard) insurance, excludable under § 1026.4(d)(2) if the consumer may choose the insurer and that is disclosed. Option C states the property-insurance rule and attaches it to the wrong coverage; that is the trap. **11. C.** § 1026.18(b): principal, plus other amounts financed that are not finance charges, minus prepaid finance charges. On Linden Street: \$365,750.00 − \$6,095.34 = \$359,654.66. **12. B.** Those four are the file's finance charges. A is the answer most loan officers give and it is wrong — \$4,156.00 of the file's \$9,720.25 in closing costs are not in the APR at all. **13. D.** A bona fide and reasonable property survey fee is excluded under § 1026.4(c)(7)(i). The other three are finance charges and legitimately move the APR. **14. C.** Three triggers, any one of which is sufficient: the APR test, the points-and-fees test, and the prepayment penalty test. Candidates who memorized only the rate test lose this question. **15. C.** Homeownership counseling is a HOEPA high-cost requirement. A, B, and D are HPML requirements — and note that a high-cost loan may well also be an HPML, which is why the question asks what applies to one and *not* the other. **16. B.** Escrow for taxes and mortgage-related insurance, first lien, with exemptions for certain small and rural creditors. HPML status adds process; it does not restrict terms. **17. C.** The average prime offer rate for a **comparable transaction**, as of the date the rate is **set** — not the application date and not the closing date. **18. B.** § 1026.43(c)(2)(i): current or reasonably expected income or assets **other than the value of the dwelling that secures the loan.** That exclusion is the direct legislative answer to equity stripping. **19. C.** The CFPB removed the 43% DTI limit from General QM and replaced it with a price-based test keyed to the loan's APR relative to APOR, with the permitted spread varying by loan amount and lien position. D is the popular misreading: the definition still requires the creditor to consider and verify income, assets, debts, and DTI or residual income. Verify the current thresholds at the CFPB. **20. B.** A rebuttable presumption. A QM that is not higher-priced gets the safe harbor. The consumer rebuts by showing insufficient residual income at consummation to meet living expenses. **21. C.** A stated payment amount is a triggering term under § 1026.24(d)(1), along with the amount or percentage of a down payment, the number of payments or period of repayment, and the amount of any finance charge. General statements like "no closing costs" and "easy monthly terms" are not. **22. B.** Regulation N, 12 CFR Part 1014, reaches material misrepresentations — express or implied — in any commercial communication about any term of a mortgage credit product. It also imposes a 24-month recordkeeping obligation. **23. B.** RESPA moved from HUD to the CFPB; TILA rulemaking moved from the Federal Reserve Board. If you answered A, you named TILA's predecessor regulator, which is the intended trap. --- **24.** Bulletin 2015-05 was rescinded in October 2020 and replaced with the CFPB's **RESPA Section 8 FAQs**, which state in substance that marketing services agreements are not per se illegal and that the analysis returns to the statute: payments must be for services actually performed, at reasonable market value, and not tied to referrals. The instruction is not "MSAs are fine now." It is that **guidance moves and the statute does not** — so a loan officer must work from the current regulation and current guidance rather than from a bulletin, a webinar, or a sales manager's memory. Bulletins get rescinded; FAQs get updated; advisory opinions get issued and withdrawn. Section 8 has read the same way since 1974. **25.** Because § 1024.14(c) forbids exactly the reasoning a commercial person naturally uses. The natural way to price a marketing arrangement with a referral partner is to ask what the partner's business is worth to you — and that is the one input the regulation removes. It converts a business judgment into a documentation problem: you must be able to show the price came from an independent assessment of the goods or services, obtained before the price was set. The sentence never to write: *"Your office sends me about four loans a year, so the banner is worth about X to me."* That sentence is not a bad look. It is the government's exhibit, and it proves the element. **26.** The three closing-cost finance charges are the **origination charge \$3,657.50**, the **discount points \$1,828.75**, and the **tax service fee \$78.00** — totaling \$5,564.25. The fourth prepaid finance charge is the **prepaid interest of \$531.09** (eight days at \$66.3861/day), giving prepaid finance charges of **\$6,095.34**. Amount financed: \$365,750.00 − \$6,095.34 = **\$359,654.66**. The appraisal, title, survey, and pest inspection are excluded under Regulation Z § 1026.4(c)(7) as bona fide and reasonable real-estate-related charges — Regulation Z treats them as costs of buying a house rather than costs of borrowing money.