RESPA (Real Estate Settlement Procedures Act)
RESPA is a federal law designed to protect consumers during the mortgage and real estate closing process. It requires transparency in fees, prohibits hidden compensation arrangements, and ensures borrowers receive important disclosures like the Loan Estimate and Closing Disclosure.
In simple terms, RESPA exists to prevent back-room deals and surprise charges at closing. It helps keep the mortgage process fair and transparent. Key disclosures include the Loan Estimate and Closing Disclosure.
RESPA also prohibits kickbacks and unearned fees — meaning no one involved in your transaction can receive hidden compensation for referring you to a specific provider. If an affiliated business arrangement exists, it must be disclosed in writing.
Why This Matters: RESPA is the reason you receive clear disclosures, cannot be forced to use a specific provider, and are protected from hidden fees. It is the foundation of transparency in mortgage lending.
Common question
What does RESPA do for borrowers?
RESPA requires transparency in fees, prohibits kickbacks and referral fees, and ensures you receive key disclosures like the Loan Estimate and Closing Disclosure on time.
Why do I get a Loan Estimate and Closing Disclosure?
RESPA and TRID require them. The Loan Estimate comes within three days of application; the Closing Disclosure at least three days before closing — so you have time to review and compare.
Related Topics
Related Mortgage Terms
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