Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What potential penalty can lenders and licensees face for violating RESPA?

1. License revocation

2. A warning letter

3. Prison terms of up to one year

4. Suspension from lending

The correct answer is: Prison terms of up to one year

Under the Real Estate Settlement Procedures Act (RESPA), violations can result in serious consequences for lenders and licensees. One of the potential penalties specifically outlined in RESPA includes criminal penalties that may involve imprisonment. A violation could lead to prison terms, including up to one year, particularly when it involves intentional misconduct or fraudulent activities. While other consequences such as license revocation, discipline by regulatory bodies, or civil penalties may also arise, the focus on criminal penalties, such as imprisonment, emphasizes the severity of the law and the seriousness with which violations are treated. This is especially pertinent in situations involving kickbacks or illegal referral fees, where the law is strict to deter unethical behavior in real estate transactions. The seriousness of the penalties under RESPA reflects the act's purpose to protect consumers from abusive practices in the real estate settlement process, and the potential for jail time underscores the need for compliance in the industry.