QUIZ: RESPA
  The Real Estate Settlement Procedures Act (RESPA) is a consumer disclosure and anti-kickback statute designed to inform consumers of their settlement costs and to prohibit kickbacks that can increase the cost of obtaining a mortgage. Take this quiz to find out how well you know about this important issue to stay on the right side of the law.
1. Which of the following is NOT a settlement service that is covered by RESPA?
Mortgage loan origination
Furniture moving
Real estate brokerage services
Lender’s credit report
   

2. Under RESPA, a real estate professional may give in return for the referral of real estate settlement service business:
A thank you
A thing of value
A kickback
A fee
   

3. To provide consumers with cost information about the mortgage process, RESPA created the good faith estimate (GFE) and the HUD-1 closing document. RESPA requires that the HUD-1 form be provided to the:
Tax assessor
Next-door neighbor
Real estate salesperson
Buyer
   

4. Substantially revised versions of the GFE and HUD-1 took effect at the beginning of 2010. Among other things, HUD’s goal was to reduce surprises to consumers at the closing table by restricting how much some costs could change between the GFE and the HUD-1. What is included among the costs that are allowed to change?
Loan origination fee
Title insurance
Transfer taxes
Credit charges such as points
   

5. In addition to reducing consumer surprises at the closing table, the revised GFE and HUD-1 are intended to make comparison shopping easier for consumers. To do that, the GFE lets consumers look at a proposed loan under all but one of these different scenarios:
The loan as proposed
The loan with a lower interest rate
The loan with different underwriting terms
The loan with lower settlement charges
   

6. To combat higher costs in real estate transactions, Section 8 of RESPA makes it a criminal act for settlement service providers to pay fees for the referral of business. One exception to this rule allows a real estate professional to pay a referral fee to:
A mortgage broker who refers a buyer who has been pre-approved
A previous customer who refers a neighbor
Another licensed real estate broker who refers a buyer from another part of the country
A relative who overhears a customer saying he or she is moving
   

7 . Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
Filling out a mortgage application
Telling the home inspector the address of the property to be inspected
The reasonable value of goods and services actually provided or performed
Doing the same thing they have been paid to do as a real estate professional
   

8 . RESPA allows title companies to provide real estate professionals:
$50 for every client referred to the title company by the real estate professional
An entry in a contest to win a car for every $1,000 in premiums paid by the real estate professional’s clients
Tickets to a baseball game once a week for the entire season
Notepads that have been imprinted with the title company’s name and phone number
   

9 . Two companies that provide settlement services and have some degree of common ownership are considered affiliated businesses under RESPA. When there is a referral from one of these companies to the other, RESPA requires the customer receive an affiliated business disclosure that contains specific information, including:
A statement that use of referred service is not required
Names of other providers of the same service
A statement that the property is pest-free
The commission being paid by the property seller
   

10. The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
The real estate professional making the referral to receive a small referral fee
The party making the referral to receive a return on its ownership interest in the company receiving the referral
The buyer to avoid having to pay real property transfer tax
The seller to require buyers to use the seller’s attorney
   

11. RESPA is interpreted and enforced by the:
U.S. Department of Justice
Local U.S. Attorney
U.S. Department of Housing and Urban Development
State Association of REALTORS®
   

12. The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is:
Up to 90 hours of community service
Loss of real estate license
Requirement to attend a RESPA education program
A fine of up to $10,000 or up to one year in prison or both
   

QUIZ RESULTS: RESPA


Brush up on this important topic and try the quiz again. To learn more about RESPA, review the Real Estate Settlement Procedures Act (RESPA) page and the Frequently Asked RESPA Questions, both at REALTOR.org.
1. Which of the following is NOT a settlement service that is covered by RESPA?
You chose not to answer this question.
Correct Answer: Furniture moving

Settlement services relate to the making of the federally-related mortgages that are covered under RESPA. Services that are provided after closing typically are not covered by RESPA and are not considered settlement services.

2. Under RESPA, a real estate professional may give in return for the referral of real estate settlement service business:
You chose not to answer this question.
Correct Answer: A thank you

RESPA prohibits any person from giving or receiving a fee, kickback, or “a thing of value” for referring business to a mortgage broker or banker, or a title company. Saying thank you is not considered a thing of value for purposes of the Act.

3. To provide consumers with cost information about the mortgage process, RESPA created the good faith estimate (GFE) and the HUD-1 closing document. RESPA requires that the HUD-1 form be provided to the:
You chose not to answer this question.
Correct Answer: Buyer

The person conducting the settlement needs to make the HUD-1 form available for inspection to the buyer (borrower) at or before settlement. The Act does not require that copies be provided to real estate professionals.

4. Substantially revised versions of the GFE and HUD-1 took effect at the beginning of 2010. Among other things, HUD’s goal was to reduce surprises to consumers at the closing table by restricting how much some costs could change between the GFE and the HUD-1. What is included among the costs that are allowed to change?
You chose not to answer this question.
Correct Answer: Title insurance

On the GFE, HUD identifies four charges that cannot change at all. These are 1.) the lender’s origination charge, 2.) the credit charges (points) for the specific interest rate chosen (after the interest rate is locked in), 3.) the borrower’s adjusted origination charges (after the interest rate is locked in), and 4.) transfer taxes. Title insurance costs can change up to 10 percent if the lender selects the insurer or the borrower chooses an insurer from a list provided by the lender, or they can change an unlimited amount if the borrower selects the insurer completely separate from the lender.

5. In addition to reducing consumer surprises at the closing table, the revised GFE and HUD-1 are intended to make comparison shopping easier for consumers. To do that, the GFE lets consumers look at a proposed loan under all but one of these different scenarios:
You chose not to answer this question.
Correct Answer: The loan with different underwriting terms

The GFE is intended to ease comparisons among costs (interest rate, brokerage fees, etc.) associated with a loan, not comparisons among different underwriting terms such as the loan-to-value ratio and length of the term.

6. To combat higher costs in real estate transactions, Section 8 of RESPA makes it a criminal act for settlement service providers to pay fees for the referral of business. One exception to this rule allows a real estate professional to pay a referral fee to:
You chose not to answer this question.
Correct Answer: Another licensed real estate broker who refers a buyer from another part of the country

Section 8(c) of RESPA includes an exception to the general prohibition on the payment of referral fees for payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate salespeople and brokers.

7 . Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
You chose not to answer this question.
Correct Answer: The reasonable value of goods and services actually provided or performed

Section 8(c) of RESPA states that nothing in the section prohibiting the payment of referral fees shall be construed as prohibiting the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.

8 . RESPA allows title companies to provide real estate professionals:
You chose not to answer this question.
Correct Answer: Notepads that have been imprinted with the title company’s name and phone number

The RESPA provision prohibiting the payment of a referral fee does not include normal educational and marketing activities that are not contingent on the referral of business. Since the notepads were not contingent on the referral of business and are typical marketing materials for a title company, they are not prohibited.

9 . Two companies that provide settlement services and have some degree of common ownership are considered affiliated businesses under RESPA. When there is a referral from one of these companies to the other, RESPA requires the customer receive an affiliated business disclosure that contains specific information, including:
You chose not to answer this question.
Correct Answer: A statement that use of referred service is not required

The disclosure must state the existence of an affiliated business arrangement between you and the company to which you are referring your clients. As part of the disclosure, your clients must be provided a written estimate of the charge or range of charges made by the company to which the clients are being referred and information that makes clear that your clients are not required to use that company.

10. The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
You chose not to answer this question.
Correct Answer: The party making the referral to receive a return on its ownership interest in the company receiving the referral

The only thing of value that can be received from an affiliated business arrangement, other than the payments permitted under other subsections of Section 8 of the Act, is a return on the ownership interest.

11. RESPA is interpreted and enforced by the:
You chose not to answer this question.
Correct Answer: U.S. Department of Housing and Urban Development

The Act vests the HUD Secretary with the authority to interpret the Act, conduct investigations into violations, and bring actions for violations of the Act. Parties other than the HUD Secretary, such as customers, also may be authorized to sue for violations of certain provisions of the Act.

12. The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is:
You chose not to answer this question.
Correct Answer: A fine of up to $10,000 or up to one year in prison or both

Penalties for violation of Section 8 of the Act may include a fine of up to $10,000 or up to one year in prison, or both.