Question

Which of the following is required by the Real Estate Settlement Procedures Act (RESPA)?

Select one:
a. The lender cannot sell the loan to a third party
b. The lender must give the borrower an escrow statement every quarter (every three months).
c. The closing costs of a sale must be equal to or lower than the Good Faith Estimate
d. The seller cannot require that buyers utilize a specific title insurance company

Answer 1

The requirement by the Real Estate Settlement Procedures Act (RESPA) is that the seller cannot require that buyers utilize a specific title insurance company. This prevents constraints on the buyer's choice of service providers for a fair competitive landscape.

Step-by-step explanation:

The Real Estate Settlement Procedures Act (RESPA) requires that certain information be provided throughout the home buying process. One of the key provisions under RESPA is to prevent kickbacks in the real estate settlement process. Specifically, d. The seller cannot require that buyers utilize a specific title insurance company is a requirement to prevent any constraints on the buyer's choice of service providers, ensuring a fair and competitive landscape for title insurance and other settlement services.

In contrast, the lender selling the loan to a third party, delivering quarterly escrow statements, or ensuring closing costs equal to or lower than the Good Faith Estimate are not specific requirements of RESPA. Instead, RESPA focuses on preventing unnecessary costs and conflicts of interest in the settlement process, such as through the prohibition of seller-mandated title insurance companies.