What does RESPA Section 8 prohibit?

• A. Kickbacks, fee-splitting, and unearned fees for referrals; requires disclosure of affiliated business arrangements.
• B. Only fee-splitting between lenders and brokers.
• C. Only disclosure of affiliated business arrangements.
• D. It does not apply to affiliated businesses.

Answer: (A)

Kickbacks, fee-splitting, and unearned fees tied to referrals of settlement services are prohibited under RESPA Section 8, and there must be disclosure of affiliated business arrangements to the borrower.

This provision is about keeping the borrower’s choices unbiased and protecting them from payments or gifts tied to steering them toward specific settlement service providers. It bans paying or receiving anything of value for referrals of settlement services, addresses splitting fees with others for referrals, and prevents charging for services that aren’t actually performed. At the same time, when there’s an affiliated business arrangement—ownership or a control interest in a settlement service provider—the law requires the lender or originator to disclose that relationship so the borrower can make an informed decision.

That’s why the best answer encompasses all three prohibitions plus the disclosure requirement. The other options are incomplete because they cover only one aspect (such as fee-splitting alone or disclosure alone) or misstate that affiliated businesses aren’t covered.