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Real Estate Settlement Procedures Act [RESPA]

Real Estate Settlement Procedures Act, (RESPA) is a federal law that gives borrowers the right to review information about the closing costs after applying for a loan, and again at closing.

The main objective was to protect homeowners by assisting them in becoming better educated while shopping for real estate services, and eliminating kickbacks and referral fees which add unnecessary costs to settlement services.

RESPA requires lenders and others involved in mortgage lending to provide borrowers with pertinent and timely disclosures regarding the nature and costs of a real estate settlement process. RESPA was also designed to prohibit potentially abusive practices such as kickbacks and referral fees, the practice of dual tracking, and imposes limitations on the use of escrow accounts.

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