What is included in the HUD RESPA (Real Estate Settlement Procedures Act)?


HUD RESPA (Real Estate Settlement Procedures Act) was initially passed in 1974. It provides consumer protection when shopping for mortgage loan services and eliminates some unnecessary charges, related to those services.

Major HUD RESPA (Real Estate Settlement Procedures Act) Requirements

  1. HUD RESPA requires that lenders provide different disclosures to borrowers, mainly about settlement costs, loan servicing and escrow account costs. Inflating those costs is prohibited. Required lender disclosures at the time of application, or within 3 business days are:
    • Special Information Booklet
    • Good Faith Estimate (GFE)
    • Mortgage Servicing Disclosure Statement
  2. The Real Estate Settlement Procedures Act also forbids imposing charges for non-existent items or services.
  3. Section 8 of HUD RESPA particularly forbids kickbacks, fee-splitting, and unearned fees. Lenders who violate Section 8 may face $10,000 fine and 1 year in prison.
  4. The HUD RESPA (Real Estate Settlement Procedures Act) also prohibits sellers from requiring that homebuyers use particular title insurance services to allow the sale.
  5. RESPA also puts limits on escrow funds and cushion required by lenders upon settlement.
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