The Importance of RESPA

I attended a continuing education class today on RESPA, the Real Estate Settlement Procedures Act.  Simply stated, RESPA ensures that consumers are given timely information about the cost of borrowing money. Besides requiring that consumers receive disclosures at various times in the transaction, RESPA also outlaws kickbacks between Settlement Service Providers.

RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process. It is enforced by HUD, and as July, 2011, is administered and enforced by the Consumer Financial Protection Bureau (CFPB).  This agency also provides information and helps you explore options if you are having trouble paying your existing mortgage.

After class, I jumped on HUD's web site. It's a great resource for consumers! While your mortgage broker can help you disseminate the information and numbers on your HUD-1 Settlement sheet, it is worthwhile to log on early in the process. 

The HUD web site is also a great resource for agents and brokers, so we can be better advocates on our client's behalf. If you are a broker or agent, it's not a bad idea to do some research and be sure you understand the difference between a legal referral fee and an illegal kickback! Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Though RESPA is not one of the most exciting things to blog about, I feel it is important that both consumers and real estate professionals understand the facts and details about RESPA. And while I hope it never happens to you, if you feel a settlement service provider has violated RESPA in an area in which the Department has enforcement authority, you may file a complaint, or contact the CFPB’s Consumer Response team at 855-411-2372 (855-729-2372 TTY/TDD). If you are a settlement service provider with questions about RESPA, you can email the CFPB at CFPB_RESPAInquiries@cfpb.gov.

As always, I look forward to hearing your additional thoughts.

Be well,
Rhonda