In a federally related mortgage loan transaction, a charge for a settlement service by a person for which no services or nominal services are performed is prohibited:
A.
regardless of the sources of payment.
B.
only if it is paid by the borrower's real estate agent.
C.
unless it is paid by the seller or the seller's real estate agent.
D.
unless it is paid by the mortgage loan originator on the borrower's behalf.
Under RESPA (Real Estate Settlement Procedures Act), it is illegal to charge a fee for a settlement service if no services or only nominal services are performed. This is true regardless of who pays the fee, whether it’s the borrower, seller, real estate agent, or any other party. RESPA prohibits unearned fees, kickbacks, or payments for referrals in federally related mortgage transactions.
Even if someone other than the borrower pays, the charge is still illegal if it is not justified by actual services performed.
[References:, RESPA Section 8 - Prohibition on kickbacks and unearned fees, CFPB RESPA Guidelines, , ]
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