This type of law protects consumers from abuses during the residential real estate purchase and loan process, enabling them to be better-informed shoppers by requiring disclosure of costs of settlement services.

Purpose of knowing this act

The department of Housing and Urban Development's, Federal Housing Administration administers several regulatory programs to ensure equity and efficiency in the sale of housing. One of these programs that come under the Real Estate Settlement Procedures Act (RESPA) applies to almost all mortgage loans and lenders. RESPA's purposes are to help consumers get fair settlement services by requiring that key service costs be disclosed in advance, to protect consumers by eliminating kickbacks and transfer fees that would unnecessarily increase the costs of settlement services and to further protect consumers by prohibiting certain practices that increase the cost of settlement services.

Types of assistance

RESPA protects clients by mandating a series of disclosures that prevent immoral practices by mortgage lenders and that provide consumers with the information to choose the real estate settlement services most suited to their needs. The disclosures must take place at the various times throughout the settlement process like when a prospective homebuyer applies for a mortgage loan, the lender must give the buyer a information booklet that contains consumer information on various real estate settlement services, an estimate of settlement costs, which lists the charges the buyer is likely to pay at settlement and states whether the lender requires the buyer to use a thorough settlement service and a mortgage servicing disclosure statement that tells the buyer whether the lender intends to keep the loan or transfer it to another lender for servicing and also gives information about how the buyer can resolve complaints. RESPA does not identify penalties for lenders that fail to provide these three items but bank regulators can impose penalties on lenders. Disclosures before settlement occurs. An affiliated business arrangement disclosure is required. Disclosures at settlement time are requires. Disclosures after settlement like an Annual Escrow Loan.

It is the best

RESPA protects consumers by barring several other practices like Kickbacks, fee splitting and unearned fees. Anyone is prohibited from giving or accommodating a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan that covers almost every loan made for suburban property.