First passed in 1974, the Real Estate Settlement Procedures Act (RESPA) is a federal statute enacted by the U.S. Department of Housing and Urban Development (HUD) to govern the real estate settlement process by mandating all parties fully inform borrowers about all closing costs, lender servicing and escrow account practices, business relationships between closing service providers and other parties to the transaction. The RESPA statute covers mortgage loans on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit.
According to HUD, the goal of the rule is to clarify and outline the settlement process and fees to consumers and eliminate illegal activity such as kickbacks and referral fees among settlement service providers. HUD's Office of Consumer and Regulatory Affairs, Interstate Land Sales/RESPA Division is responsible for enforcing RESPA.
more RESPA Tips »