Real Estate Settlement Procedures Act (RESPA)

What is ‘Real Estate Settlement Procedures Act – RESPA’

This act was designed to protect potential homeowners and enable them to become more intelligent consumers. RESPA requires that lenders provide greater amounts of information to prospective borrowers at certain points in the loan settlement process. It also prohibits the various parties involved from paying kickbacks to each other.

Explaining ‘Real Estate Settlement Procedures Act – RESPA’

Originally passed by Congress in 1974, the latest RESPA regulations were published on November 17, 2008 and were scheduled to go into effect on January 1, 2010. Before this act was created, it was a common practice for a lender to advertise a loan at a certain rate of interest provided the borrower use the lender’s title insurance company or other affiliate at a greatly inflated price. The affiliate would then pay the lender a portion of the inflated fee as a kickback.

Further Reading

  • The value of the sunshine cure: The efficacy of the Real Estate Settlement Procedures Act disclosure strategy – www.jstor.org [PDF]
  • The real estate brokerage market: a critical reevaluation – onlinelibrary.wiley.com [PDF]
  • A Product of Compromise: Or Why Non-Pecuniary Damages Should Not Be Recoverable Under Section 2605 of the Real Estate Settlement Procedures Act – heinonline.org [PDF]
  • Real Estate Settlement and Procedures Act of 1974 and Amendments of 1975: The Congressional Response to High Settlement Costs – heinonline.org [PDF]
  • The Lender's Labyrinth and the Banker's Burden: The Real Estate Settlement Procedures Act of 1974 and the 1975 Amendents – heinonline.org [PDF]
  • Regulation in Housing Finance: Bringing Theory to Policy – search.proquest.com [PDF]
  • Real Estate Settlement Pricing: A Theoretical Framework – onlinelibrary.wiley.com [PDF]
  • Comment: The economic functions of referrals and referral fees – search.proquest.com [PDF]
  • Uniformity or Diversity: Residential Real Estate Finance Law in the 1990's and the Implications of Changing Financial Markets – heinonline.org [PDF]