Real Estate Settlement Procedures Act (RESPA)
The Real Estate Settlement Procedure Act (RESPA) is a piece of law passed by the US Congress in 1974 to protect homebuyers and home sellers against bad settlement practices.
The Real Estate Settlement Procedure Act (RESPA) regulates mortgage loans by requiring the lender to disclose certain information about a loan, including the estimated closing costs and annual percentage rate (APR). Its objective is to bring uniformity in real estate settlement practices when “federally related” first mortgage loans are made on one-to-four family residences, condominiums and cooperatives, and also to educate homeowners and prohibit abusive practices like referral fees, kickbacks, and the limitless use of escrow accounts.
Here are some of the things the Real Estate Settlement Procedure Act (RESPA) forces lenders providing mortgages that are secured by federal programs like Ginnie Mae:
- Providing disclosures like the Mortgage Servicing Disclosures, Special Information Booklet, HUD-1/1A settlement, a Good-Faith Estimate of Settlement Costs (GFE), and the ability to compare these last two statements at closing
- Following certain escrow accounting practices
- Prohibiting the payment of kickbacks and referral fees to settlement service providers like appraisers, brokers and title companies
- Stopping foreclosure when the borrower submits a complete application for loss mitigation options.
Enforcement and Administration of the Real Estate Settlement Procedure Act (RESPA) was originally done by the Department of Housing and Urban Development (HUD) but since 2001 became part of the Consumer Financial Protection Bureau (CFPB).
Real Estate Advice:
For Sale By Owners (FSBO) will usually be unaware of the Real Estate Settlement Procedure Act (RESPA) and become easier prey to people that take advantage of loopholes. So beware!
Popular Real Estate Terms
Construction method where reinforced concrete is used with concrete block and mortar to form an extremely strong building. Reinforced concrete construction is often used in conjunction ...
Conveyed by an executor. If the testator to a will does not expressly give the executor authority to convey the property, the probate court must authorize it. ...
Rating used by lenders and creditors to determine if a credit applicant should be granted credit. It depends on many factors such the applicant's job history, earnings, net worth, etc. Some ...
Last installment payment, substantially greater than the previous installment payments. The unpaid balance of a long-term loan is paid off in a lump sum at the end of the loan term. ...
Transactions taking place between individuals who are alive rather than when one of the parties is either dead (e.g., estate) or is contemplating death. For example, a deed may transfer ...
Classification of one's ownership rights in land. One way either buy the land and own all rights to it or lease it where one's rights are described in and limited by the lease agreement. ...
Permission to do something that differs from the basic zoning requirement. An example is a homeowner receiving special authorization to build a two-family house in a single family zoned ...
Market Analysis in the Real Estate Market is basically research done concerning specific properties in relation to the overall current climate of the real estate industry. A good ...
Doing business as, or DBA, means an official moniker for your enterprise or company. Regularly, a DBA is a state certificate serving as a registration name and issued under a ...
Have a question or comment?
We're here to help.