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The Real Estate Settlement Procedures Act (RESPA) was enacted in 1974 to protect buyers by requiring disclosure of the amounts and types of charges they must pay at closing. Transactions involving a federally related mortgage loan secured by a lien on residential property are covered by the Act.
Following are four principal areas of the RESPA:
Uniform Closing Statement: the closing agent must use the HUD-1 form.Borrower's Special Information Booklet ( Settlement Costs and You): Must be given to the borrower at the time of loan application or within three business days of loan application.
Good-Faith Estimate of Settlement Costs: Must be given to the borrower at the time of the loan application or within three business days of receipt of application. It itemizes closing costs known to the lender.Selection of the Closing Agent: The lender must disclose the business relationship and the charges of any closing agent if the lender requires that the loan be closed by that agent.
No Kickbacks: Service fees may not be paid unless a service was actually performed by a person licensed to do so, and all parties are informed. Referral fees between brokers are permitted.
Purchase of Title Insurance: A seller may not make it a condition of the sale that the buyer purchase title insurance from a particular company.
Web Link U.S. Department of Housing and Urban Development: RESPA: http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm.
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You are so right. RESPA is all about disclosure and choice. The consumer has a right to know what anticipated charges will be and they have a right to choose their provider. Thank you for helping to spread the word.
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