Laws in a Nutshell: RESPA

Laws: Real Estate Settlement Procedures Act of 1974 and U.S. Department of Housing and Urban Development regulations

Major provisions: 

  • Prohibits real estate practitioners from receiving referral fees or anything else of value from service providers unless the salespeople actually perform a service that justifies the fee. Fees just for referring business are illegal.
  • Prohibits practitioners or homebuilders from requiring buyers to purchase title insurance from a particular provider.
  • Requires lenders to provide good faith estimates of closing costs and use the HUD-1 closing document.

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