What Is Real Estate Settlement Procedures Act? – The Top Guide

Abstract

About Real Estate Settlement Procedures Act When purchasing real estate, there are many laws that a lender has to follow to close on a mortgage. What Is RESPA? RESPA which stands for Real Estate Settlement Procedures Act was a bill initiated by congress in 1974 and was enacted on June 20, 1975. The lender agrees to give $200 to the real estate agent for each borrower he brings to the table for processing a mortgage. According to the Real Estate Settlement Procedures Act, the lender is only allowed to keep 1/6th of the amount that is needed to pay your taxes and insurance for the year. V - Type of Loan: Loans that fall under the Real Estate Settlement Procedures Act apply for one to four-unit family, primary, investments, or secondary residences. VI - Affiliated Business Arrangements: All the real estate service providers that are involved in a transaction should disclose their business affiliation with any other real estate service provider including the cost of that affiliate service. Conclusion The Real Estate Settlement Procedures Act was enacted for the buyers so that they don't fall for the unethical practices by any of the real estate service providers like a lender, mortgage brokers, real estate agents, appraisal companies, or any other affiliate business involved in the transaction.