The Real Estate Settlement Procedures Act (or RESPA) is a consumer protection statute relating to real estate transactions.
RESPA requires that consumers receive disclosures at various times in the transaction – and outlaws kickbacks that increase the cost of settlement services. RESPA makes obtaining mortgage financing clearer and, ultimately, cheaper for consumers.
When you apply for a mortgage loan, RESPA requires your mortgage broker or lender to give you a Good Faith Estimate of settlement costs you’re likely to pay. The final version used at closing explicitly states all costs involved with the real estate loan and to whom the individual charges and fees will be paid to.
RESPA also requires a Mortgage Servicing Disclosure Statement that discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.
RESPA helps homebuyers be better shoppers in the home buying process. It is enforced by the United States Department of Housing and Urban Development.
