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RESPA - Real Estate Settlement Procedures Act

The Real Estate Settlement Procedures Act is a consumer protection statute. One of its purposes is to help consumers become better shoppers for settlement services. Another purpose is to eliminate kickbacks and referral fees that can unfairly increase the costs of settlement services. RESPA requires that borrowers receive disclosures, all at various times. Certain disclosures spell out the costs related to the settlement, describe business relationships between settlement service providers and outline lender servicing and escrow account details and practices.

RESPA generally covers loans secured with a mortgage placed on one - to - four family residential properties. These include most purchase loans, refinances, assumptions, equity lines of credit and property improvement loans. HUD's Office of Consumer and Regulatory Affairs, Interstate Land Sales - RESPA Division is responsible for enforcing RESPA.

Disclosures at the time of loan application -

When borrowers apply for a loan, the following are what the mortgage broker/lender should provide.

Disclosures before closing occurs -

Disclosures at settlement -

The HUD-1 settlement statement shows the actual settlement costs of the loan transaction. Separate forms may be prepared for the borrower and the seller. It is not the practice that the borrower and seller attend the settlement, the HUD-1 should be mailed as soon as possible after settlement.