Real Estate Settlement Procedures Act Applies Only To
The Real Estate Settlement Procedures Act, commonly known as RESPA, is a federal law that was enacted in 1974. The primary purpose of this law is to protect consumers from certain practices in the real estate settlement process. The law is regulated and enforced by the Consumer Financial Protection Bureau (CFPB).
Covered Transactions
The RESPA applies only to certain types of real estate transactions. Specifically, it applies to transactions involving a federally related mortgage loan. This includes loans for the purchase or refinancing of a home, as well as home equity loans and reverse mortgages.
Exemptions
There are certain types of transactions that are exempt from the RESPA. These include cash transactions, transactions involving vacant land, and transactions involving rental property. Additionally, some types of loans are also exempt, such as loans for business purposes and loans secured by mobile homes.
Prohibited Practices
The RESPA prohibits certain practices in the real estate settlement process. These include the giving or receiving of kickbacks, referral fees, or unearned fees. Additionally, the law requires that borrowers receive certain disclosures regarding the settlement process, including a Good Faith Estimate of closing costs and a HUD-1 Settlement Statement.
Enforcement
The RESPA is enforced by the CFPB, which has the power to investigate and penalize violations of the law. Violations can result in fines, penalties, and even criminal charges in some cases. Consumers who believe they have been the victim of a RESPA violation can file a complaint with the CFPB.
Conclusion
The Real Estate Settlement Procedures Act is an important law that helps protect consumers in the real estate settlement process. It applies only to certain types of transactions and prohibits certain practices, and is enforced by the Consumer Financial Protection Bureau. If you are involved in a real estate transaction, be sure to familiarize yourself with the requirements of the RESPA to ensure that your rights are protected.