RESPA is a federal law designed to protect consumers in real estate transactions by requiring disclosures and prohibiting abusive practices in the settlement process.
Key Purposes
Ensure buyers receive clear disclosure of settlement costs
Eliminate kickbacks and referral fees
Prevent unnecessarily high settlement charges
Transactions Covered
Residential properties with 1–4 units
Federally related mortgage loans
Purchase loans, refinances, and certain assumptions
Prohibited Practices
Kickbacks for referrals
Unearned fees (fees for services not actually performed)
Fee splitting except for actual services rendered
Required Disclosures
Loan Estimate (LE)
Closing Disclosure (CD)
Servicing disclosure
Affiliated business arrangement disclosure (if applicable)
Escrow Account Rules
Limits how much a lender may require in escrow
Requires annual escrow account statements
Enforcement and Penalties
Enforced by the Consumer Financial Protection Bureau (CFPB)
Civil and criminal penalties may apply
Exam Tip
RESPA applies to residential, not commercial, transactions
RESPA focuses on disclosure and anti-kickback rules