Generally, RESPA only applies to purchases and refinances of home loans, for consumer purposes.
RESPA:
- requires lenders to provide borrowers with a standardized Good Faith Estimate of closing costs at the time of application or within 3 business days.
- encourages buyers/borrowers to shop around by requiring lenders to honor the estimate of closing costs for at least 10 days.
- requires settlement agents (title companies, attorneys) to complete a standardized closing statement.
- prohibits illegal kickbacks (unearned fees) among settlement service providers. Settlement service providers are attorneys, appraisers, insurance agents, real estate agents, lenders, title insurance companies, notaries, homeowner warranty companies, etc.
- is currently enforced by the Department of Housing and Urban Development. Under the Dodd-Frank Act, those responsibilities are to be transferred to the newly created Consumer Financial Protection Bureau.
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