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.

 
How good is your knowledge of RESPA?

Take this short quiz from the REALTOR^® magazine. Answers are at the end of the quiz. No peeking!

 

1.	Which of the following is NOT a settlement service that is covered by RESPA?
	a. Mortgage loan origination b. Furniture moving c. Real estate brokerage services d. 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. A thank you b. A thing of value c. A kickback d. 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:
	a. Tax assessor b. Next-door neighbor c. Real estate salesperson d. Buyer
4.	RESPA rules do NOT cover this type of transaction:
	a. Purchase of a small warehouse financed with a Small Business Administration loan b. Purchase of a condominium with a Federal Housing Administration mortgage c. Purchase of a single-family home with a Veteran's Administration loan d. Purchase of a two-flat that the owners plan to live in and rent out the other unit financed with          a conventional loan
5.	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. A mortgage broker who refers a buyer who has been pre-approved b. A previous customer who refers a neighbor c. Another licensed real estate broker who refers a buyer from another part of the country d. A relative who overhears a customer saying he or she is moving
6 .	Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
	a. Filling out a mortgage application b. Telling the home inspector the address of the property to be inspected c. The reasonable value of goods and services actually provided or performed d. Doing the same thing they have been paid to do as a real estate professional
7 .	RESPA allows title companies to provide real estate professionals:
	a. $50 for every client referred to the title company by the real estate professional b. An entry in a contest to win a car for every $1,000 in premiums paid by the real estate          professional's clients c. Tickets to a baseball game once a week for the entire season d. Notepads that have been imprinted with the title company's name and phone number
8 .	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. A statement that use of referred service is not required b. Names of other providers of the same service c. A statement that the property is pest-free d. The commission being paid by the property seller
9.	The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
	a. The real estate professional making the referral to receive a small referral fee b. The party making the referral to receive a return on its ownership interest in the company          receiving the referral c. The buyer to avoid having to pay real property transfer tax d. The seller to require buyers to use the seller's attorney
10.	A borrower may be required to pay for the ______ selected by the lender to represent the lender's interests:
	a. Title company b. Attorney c. Real estate broker d. Home inspector
11.	RESPA is interpreted and enforced by the:
	a. U.S. Department of Justice b. Local U.S. Attorney c. U.S. Department of Housing and Urban Development d. State Association of REALTORS®
12.	The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is:
	a. Up to 90 hours of community service b. Loss of real estate license c. Requirement to attend a RESPA education program d. A fine of up to $10,000 or up to one year in prison or both

Answers:

1. Furniture moving.
2. A thank you.
3. Buyer
4. Purchase of a small warehouse financed with an SBA loan
5. Another licensed real estate broker from another part of the country.
6. The reasonable value of goods & services actually performed or provided.
7. Notepads that have been imprinted.
8. A statement that use of referred service is not required.
9. The party making the referral to receive a return on its ownership interest in the company receiving the referral.
10. Attorney
11. U. S. Department of Housing & Urban Development
12. A fine of up to $10,000 or up to one year in prison or both.

How did you score?
Hope this short quiz raises your level of awareness to RESPA and keeps you on the right side of the law.

See you next week.

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