RESPA

Real Estate Settlement Procedures Act

Long title	Real Estate Settlement Procedures Act of 1974
Acronyms (colloquial)	RESPA
Enacted by	the 93rd United States Congress
Effective	Dec. 22, 1974
Citations
Public law	P.L. 93-533
Statutes at Large	88 Stat. 1724
Codification
Titles amended	12
U.S.C. sections created	2601-2617
Legislative history
Passed the Senate on July 24, 1974 (unanimous consent) Passed the House of Representatives on August 14, 1974 (unanimous consent) Reported by the joint conference committee on Dec. 9, 1974; agreed to by the Senate on Dec. 9, 1974 (unanimous consent) and by the House of Representatives on Dec. 11, 1974 (unanimous consent) Signed into law by President Gerald Ford on Dec. 22, 1974
Major amendments
P.L. 94-205, 89 Stat. 1157 (1976)

The the Real Estate Settlement Procedures Act (RESPA) was a law passed by the United States Congress in 1974 and codified as Title 12, Chapter 27 of the United States Code, 12 U.S.C. §§ 2601–2617. The main objective was to protect homeowners by assisting them in becoming better educated while shopping for real estate services, and eliminating kickbacks and referral fees which add unnecessary costs to settlement services. RESPA requires lenders and others involved in mortgage lending to provide borrowers with pertinent and timely disclosures regarding the nature and costs of a real estate settlement process. RESPA was also designed to prohibit potentially abusive practices such as kickbacks and referral fees, the practice of dual tracking, and imposes limitations on the use of escrow accounts.

RESPA was enacted in 1974 and was originally administered by the Department of Housing and Urban Development (HUD). In 2011, the consumer financial protection bureau (CFPB), created under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, assumed the enforcement and rulemaking authority over RESPA. On December31, 2013, the CFPB published final rules implementing provisions of the Dodd-Frank Act, which direct the CFPB to publish a single, integrated disclosure for mortgage transactions, which included mortgage disclosure requirements under the truth in lending Act (TILA) and sections 4 and 5 of RESPA. As a result, Regulation Z now houses the integrated forms, timing, and related disclosure requirements for most closed-end consumer mortgage loans.

It was created because various companies associated with the buying and selling of real estate, such as lenders, real estate agents, construction companies and title insurance companies were often engaging in providing undisclosed kickbacks to each other, inflating the costs of real estate transactions and obscuring price competition by facilitating bait-and-switch tactics.

For example, a lender advertising a home loan might have advertised the loan with a 5% interest rate, but then when one applies for the loan one is told that one must use the lender's affiliated title insurance company and pay $5,000 for the service, whereas the normal rate is $1,000. The title company would then have paid $4,000 to the lender. This was made illegal, in order to make prices for the services clear so as to allow price competition by consumer demand and to thereby drive down prices.

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