Real Estate Settlement Procedures Act (RESPA)


The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute that covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit.

The purpose of RESPA is to:

  • Help consumers become better shoppers for settlement services
  • Eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services

Helping Consumers

RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers. For more information, see RESPA: Disclosures.

Eliminating Kickbacks

RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company. Section 10 of RESPA sets limits on the amounts that a lender may require a borrower to put into an escrow account. For more information, see RESPA: Protections and Enforcement.

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