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Real Estate Settlement Procedures Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) made significant changes to the federal consumer protection laws for residential mortgage loans, including the Real Estate Settlement Procedures Act (RESPA) and the Truth In Lending Act (TILA).

The Real Estate Settlement Procedures Act (RESPA), implemented as Regulation X, is a federal consumer protection law designed to provide homeowners with greater transparency and protection during the home buying and mortgage process. The statute was created to reform the real estate settlement (closing) process in three specific ways:

  1. Mandatory Disclosure: Requires lenders to provide borrowers with timely disclosures regarding the nature and costs of the settlement process (currently implemented under TRID rules in Regulation Z)
  2. Elimination of Kickbacks: Prohibits "kickbacks," referral fees, and unearned fee-splitting in the real estate settlement process.
  3. Escrow Regulation: Imposes disclosures and timing requirements, as well as certain limits, on escrow practices involving Federally-related mortgages, and prevents lenders from overcharging for escrow reserves.

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Rod Alba

Rod Alba

Senior Vice President, Real Estate Finance

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