Final answer:
Accepting an upfront fee for loan modification negotiations violates the Real Estate Settlement Procedures Act (RESPA), which bans referral fees and unearned fees in connection with federally-related mortgage loans.
Step-by-step explanation:
A loan originator who accepts an upfront fee for negotiating a loan modification is violating the Real Estate Settlement Procedures Act (RESPA). RESPA prohibits any person from receiving a fee, kickback, or anything of value for the referral of settlement service business related to a federally related mortgage loan. It also prohibits fee splitting and receiving unearned fees. While the Truth in Lending Act (TILA) does relate to the disclosure of loan terms, it is not the specific law being violated by charging an upfront fee. Similarly, the Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on race, gender, and other factors, and the Fair Housing Act (FHA) prohibits discrimination in housing transactions. Neither addresses the issue of upfront fees in loan modifications.