Definition
RESPA ensures lenders and settlement providers disclose all costs and prohibit kickbacks. It requires clear disclosure of settlement costs and prohibits lenders from requiring specific service providers or charging for services not rendered.
Not sure where this fits?
Answer a few questions and we’ll open the path that fits, at the right step.
Find my pathAbout this term
RESPA protects consumers by requiring clear disclosure of settlement costs and prohibiting predatory practices like kickbacks between lenders and third-party service providers. RESPA mandates that borrowers receive a Closing Cost Estimate, and prohibits lenders from requiring the use of specific service providers or charging for services not rendered. RESPA is enforced by the Consumer Financial Protection Bureau. Violations can result in significant penalties and treble damages to borrowers.
Pro Tip
Under RESPA, you can shop for services like title insurance and appraisals; lenders cannot steer you to specific providers or charge inflated fees.
Example
A lender cannot require you to use a specific title company in exchange for favorable rates, nor can a title company pay the lender for referrals; RESPA prohibits these kickbacks.