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Real Estate Settlement Procedures Act of 1974 (RESPA)
Practical Law Glossary Item w-001-3674 (Approx. 3 pages)
Glossary
Real Estate Settlement Procedures Act of 1974 (RESPA)
A federal consumer protection statute first enacted in 1974 that, among other things:
- Protects consumers from abuses during residential real estate purchase and loan transactions.
- Is administered by the Consumer Financial Protection Bureau (CFPB).
- Covers loans secured by mortgages on one-to-four family residential property, including:
- loans to purchase property;
- refinances; and
- equity loans and lines of credit.
- Requires lenders, mortgage brokers, and home loan servicers to:
- disclose to borrowers all settlement costs, practices, and relationships; and
- provide a good faith estimate of the closing costs before the loan closing.
- Prohibits kickbacks.
- Places limitations on using escrow accounts.
(12 U.S.C. §§ 2601 to 2617.)
The Real Estate Settlement Procedures Act (RESPA) has been amended several times since it was enacted in 1974. The National Affordable Housing Act of 1990 amended RESPA to require detailed disclosures to a borrower for:
- The transfer, sale, or assignment of the home loan servicing.
- Mortgage escrow accounts at the closing and each year after the closing, to include an itemization of the charges paid:
- by the borrower; and
- to the home loan servicer from the escrow account.
(42 U.S.C. §§ 12701 to 12899i.)
The Dodd-Frank Act of 2010 amended RESPA provisions related to mortgage servicing activities and other consumer protections. For more information on those amendments, see Practice Notes, Summary of the Dodd-Frank Act: Mortgage Reform and Anti-Predatory Lending and The Mortgage Servicing Rules Implementing Dodd-Frank.