Which of the following actions is strictly prohibited by RESPA?

The action that is strictly prohibited by the Real Estate Settlement Procedures Act (RESPA) is the provision of kickbacks for settlement services. RESPA was established to ensure that consumers receive disclosures regarding the costs associated with their mortgage and settlement processes. One of the key provisions of RESPA is the prohibition against kickbacks, which are payments made in exchange for referrals of business related to settlement services. This prohibition aims to eliminate practices that can inflate the costs of settlement services and to promote transparency and fairness in the real estate transaction process.

Kickbacks can create conflicts of interest, lead to unnecessary costs for consumers, and undermine the principle of fair competition. Therefore, any arrangement where a real estate agent or lender receives compensation for directing business to specific settlement service providers, without additional legitimate services being provided, violates RESPA’s regulations.

In contrast, while other options might involve practices that could raise ethical concerns, they do not outright violate RESPA. For instance, paying referral fees may be permissible under certain conditions, and providing consumers with discounts on closing costs does not conflict with RESPA’s objectives. Disclosing the Annual Percentage Rate (APR) in loan documents is a requirement of the Truth in Lending Act (TILA) and complements, rather than contradicts,