Final answer:
Settlement service provider A can legally pay provider B part of the fees charged to a borrower if provider B has performed bona fide services to earn the fee, as mandated by RESPA to protect consumers from kickbacks and unearned fees. The correct option is (b).
Step-by-step explanation:
It is legal for settlement service provider A to pay settlement service provider B a portion of fees charged to a borrower only when service provider B has performed bona fide services to earn the fee.
This is in accordance with the Real Estate Settlement Procedures Act (RESPA), which prohibits kickbacks and unearned fees. These rules are designed to protect consumers from unnecessary costs added to the price of settlement services.
Although consumer awareness of the fee splitting, both providers having a written agreement, and being separate entities are good practices, these conditions are not the decisive factor in legality.
The legality centers predominantly on whether bona fide services were performed. This means that provider B must have actually rendered services that justify the portion of the fee they received, rather than just receiving payment for a referral.