The Real Estate Settlement Procedures Act Applies To
The Real Estate Settlement Procedures Act (RESPA) is a federal law that applies to anyone involved in the homebuying process. This includes mortgage lenders, real estate agents, and settlement service providers. The purpose of RESPA is to protect homebuyers by ensuring that they are fully informed about the costs and fees associated with buying a home.
Mortgage Lenders
Mortgage lenders are required to provide homebuyers with a Good Faith Estimate (GFE) of the closing costs associated with the loan. This estimate must be provided within three days of the loan application. The GFE must include an itemized list of all fees and charges associated with the loan, including origination fees, appraisal fees, and title insurance fees.
In addition to the GFE, mortgage lenders must also provide homebuyers with a HUD-1 Settlement Statement at least 24 hours prior to the closing of the loan. This statement outlines all of the costs associated with the loan and must be signed by the homebuyer.
Real Estate Agents
Real estate agents must also comply with RESPA. They are required to provide homebuyers with a copy of the HUD-1 Settlement Statement at least 24 hours prior to the closing of the sale. In addition, real estate agents cannot receive any kickbacks or referral fees from settlement service providers.
Settlement Service Providers
Settlement service providers include title companies, appraisers, and home inspectors. These providers are required to provide homebuyers with a written estimate of all fees and charges associated with their services.
Settlement service providers are also prohibited from charging homebuyers for services that were not actually performed. For example, a title company cannot charge a fee for a title search if they did not actually perform a title search.
Conclusion
RESPA is an important law that protects homebuyers from hidden fees and charges. By requiring mortgage lenders, real estate agents, and settlement service providers to provide homebuyers with detailed information about the costs associated with buying a home, RESPA helps to ensure that homebuyers are fully informed about the financial implications of their purchase.