Real Estate Settlement Procedures Act

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Real Estate Settlement Procedures Act (RESPA)

A federal consumer protection statute supervised and enforced by the Department of Housing and Urban Development (HUD). First passed in 1974, it requires various disclosures in order to help consumers make more informed decisions when shopping for settlement (real estate closing) services. It also seeks to eliminate kickbacks and referral fees, which unnecessarily increase the costs of certain settlement services. It applies to mortgage loans on single-family housing, duplexes, triplexes, and four-plexes (generally described as “one- to four-family residential property”), whether the loan is for a purchase, refinance,property improvement,or home equity line of credit.

• When borrowers apply for a purchase loan, they must be given a special information book- let regarding various real estate settlement services, a good-faith estimate of settlement costs, and a mortgage servicing disclosure statement regarding whether the lender will service the loan or transfer it to another.

• There must be an affiliated business arrangement disclosure whenever a closing company recommends a particular attorney, appraiser, surveyor or others if that third party is not independent from the closing company. The closing company cannot require use of a particular third party, but the lender can do so in order to protect its interests.

• The settlement agent must provide the consumer with the HUD-1 Settlement Statement, which clearly shows all receipts, all disbursements, all credits and charges, and all fees in connection with the transaction. The borrower may request to see the HUD-1 one day before closing.

• Loan servicing companies must supply an annual escrow statement to borrowers at least once a year. It summarizes all escrow account activity for taxes, insurance, and other escrow items.

• If the loan servicing is transferred, the borrower must be given a servicing transfer statement at least 15 days before the effective date, including a toll-free number and address for the new servicer. If the borrower makes timely payments to the old servicer during the first 60 days after transfer, the borrower cannot be penalized.

• Kickbacks and referral fees for settlement service business involving federally insured loans are prohibited, with civil and criminal penalties for violation.

• Sellers may not specify the buyer use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision and receive an amount equal to three times all charges made for title insurance.

• Escrow deposit payments cannot be excessive. Lenders may require borrowers to pay no more than one-twelfth of the total annual disbursements each month, plus a cushion that cannot exceed one-sixth of the total disbursements for the year.

References in periodicals archive ?
She has represented major loan servicers in both state and federal court, and is experienced handling claims involving the Florida Consumer Collection Practices Act, Fair Debt Collections Practice Act, Telephone Consumer Protection Act, Truth in Lending Act, Real Estate Settlement Procedures Act, and Fair Credit Reporting Act.
Topics of discussion include the Bank Secrecy Act, Community Reinvestment Act, and the Truth-in-Lending (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) Integrated Disclosures Rule, also known as TRID.
The bureau on Thursday proposed amendments to federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act.
Since 2008, HUD has been pursuing an investigation into the captive reinsurance arrangements of private mortgage insurers, including Radian, to determine whether these arrangements constituted an unlawful payment under the federal Real Estate Settlement Procedures Act (RESPA).
6 that it has joined the Appraisal Institute and the American Society of Farm Managers and Rural Appraisers in responding to the Consumer Financial Protection Bureau's Integrated Mortgage Disclosures and proposed Closing Disclosure Form under the Real Estate Settlement Procedures Act and Truth in Lending Act.
The allegations of wrongdoing center around possible violations of the Real Estate Settlement Procedures Act, which bars a lender from steering a borrower to a particular mortgage insurer with whom the lender has a business relationship.
The work covers topics relating to residential mortgages including government regulations such as the Truth in Lending Act, the Real Estate Settlement Procedures Act, and the Fair Housing Act, as well as more general topics including treatment of residential mortgages in bankruptcy, consumer privacy and data protection statutes, and state law preemptions of federal guidelines.
When Rooney reviewed the draft agreement, apparent violations of not only the Illinois Rules of Professional Conduct but also the federal Real Estate Settlement Procedures Act (RESPA) jumped out at him.
Under the Real Estate Settlement Procedures Act, consumers cannot be compelled to use the services of affiliates of realty firms, title companies, builders and other participants.
The new report will summarize court decisions, pleadings, regulatory actions and legislative developments and cover topics such as the Truth in Lending Act, the Home Owners Equity Protection Act, the Real Estate Settlement Procedures Act, the Fair Housing Act, predatory lending, mortgage disclosures, discrimination, consumer protection/unfair trade practices, foreclosure and bankruptcy.
The book ends with a discussion of various fair lending rifles and consumer protection rules that regulate the residential financing industry, including the Equal Credit Opportunity Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Truth in Lending Act, and the Real Estate Settlement Procedures Act.
The Financial Services Committee is concerned about recent investigations by state regulators revealing that title companies have made payments for referrals to developers, mortgage lenders, and real estate agents in violation of the Real Estate Settlement Procedures Act," Oxley said in his request.

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