The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purpose of RESPA is to help consumers become better shoppers for settlement services and to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers. RESPA also prohibits certain practices that increase the cost of settlement services.
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:
1. A Special Information Booklet, which contains consumer information regarding various real estate settlement services.
2. A Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement.
3. A Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.
If the borrowers don't get these documents at the time of loan application, the lender must mail them within three business days of receiving the loan application. If the lender turns down the loan within three days, however, then RESPA does not require the lender to provide these documents.
The Real Estate Settlement Procedures Act (RESPA) is administered and enforced by the Consumer Financial Protection Bureau (CFPB).
If you are a consumer with a question or complaint related to your mortgage or mortgage servicer, please contact the CFPB’s Consumer Response team at 855-411-2372 (855-729-2372 TTY/TDD) 8am-8pm EST.
If you are a settlement service provider with questions about RESPA, please email the CFPB at CFPB_RESPAInquiries@cfpb.gov
For more information go to the Consumer Financial Protection Bureau website at https://www.consumerfinance.gov/