Real Estate Finance

RESPA

The Real Estate Settlement Procedures Act, a federal law governing disclosures and prohibiting kickbacks in residential mortgage transactions.


Definition

RESPA requires lenders to provide borrowers with a Loan Estimate within 3 business days of application and a Closing Disclosure at least 3 business days before closing. It prohibits kickbacks and unearned referral fees. TRID combined RESPA and TILA disclosures into the Loan Estimate and Closing Disclosure forms. RESPA also limits escrow account requirements for taxes and insurance.

Exam Tip

RESPA prohibits kickbacks. A referral fee for simply sending clients, without actual services — violates RESPA.

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