12 CFR Part 1024 - Real Estate Settlement Procedures Act (Regulation X) | Consumer Financial Protection Bureau (2024)

FAQs

What is the Real Estate Settlement Procedures Act RESPA regulation x? ›

The Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. § 2601, et seq.) became effective on June 20, 1975. It requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures about the nature and costs of the real estate settlement process.

The regulation covers topics such as:

Prohibition on kickbacks and unearned fees. Mortgage origination and servicing disclosures. Affiliated business arrangements. Title insurance. Escrow accounts.

The Real Estate Settlement Procedures Act (RESPA) provides consumers with improved disclosures of settlement costs and to reduce the costs of closing by the elimination of referral fees and kickbacks. RESPA was signed into law in December 1974, and became effective on June 20, 1975.

The penalty for violating section 8 of RESPA is a fine of up to $10,000 and possibly one year of jail time. In some cases, the RESPA violator may also be charged in a private lawsuit to pay the borrower up to three times the charge for settlement services.

The Real Estate Settlement Procedures Act covers all federally related mortgage loans for one-to-four-family properties. A federally related mortgage loan is a loan for a residential property insured by the government. This includes: Home loans.

What types of transactions are generally not covered by RESPA? -A rental property transaction or other business purpose transaction. RESPA covers transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property.

Today, the Supreme Court held 7-2 that the Consumer Financial Protection Bureau's funding structure—which allows the agency to draw money from the Federal Reserve—does not violate the Constitution's Appropriations Clause.

Title X of this Act creates a new Bureau of Consumer Financial Protection within the Federal Reserve Board as a new supervisor for certain financial firms and as a rulemaker and enforcer against unfair, deceptive, abusive, or otherwise prohibited practices relating to most consumer financial products or services.

RESPA and this part apply to federally related mortgage loans, except as provided in paragraphs (b) and (d) of this section. (b) Exemptions. (2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by 12 CFR 1026.3(a)(1) of Regulation Z.

For protection, a consumer who applies for a mortgage loan must follow the respa guidelines. RESPA does not, however, protect all types of loans. RESPA does not cover agricultural and business loans secured by real estate.

What is a RESPA violation? ›

There are several ways mortgage lenders or other service providers can commit a RESPA violation. RESPA violations include inflating costs, using bribes or shell entities, and implementing kickbacks or referral fees. These violations can result in steep fees and even jail time.

RESPA prohibits a real estate broker or agent from receiving a “thing of value” for referring business to a settlement service provider, or SSP, such as a mortgage banker, mortgage broker, title company, or title agent.

Regulation X prevents several real estate practices, such as real estate agents receiving kickbacks for referring buyers to specific settlement companies. Additionally, under RESPA, mortgage lenders are not allowed to charge a fee for preparing a Settlement Statement or Escrow Account statement.

When a consumer proves a violation of RESPA, the consumer is entitled to actual damages, costs of suit and reasonable attorneys fees. If the consumer can prove the loan servicer engaged in an ongoing pattern and practice of violating RESPA, the consumer is entitled to up to $2,000 per violation of the statute.

Section 9 of RESPA prohibits a seller from requiring the use of a particular title insurance company when the buyer will pay for the title insurance.

A settlement service includes any service provided in connection with a real estate settlement including, but not limited to, title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of ...

RESPA has two main purposes: (1) to mandate certain disclosures in connection with the real estate settlement process so home purchasers can make informed decisions regarding their real estate transactions; and (2) to prohibit certain unlawful practices by real estate settlement providers, such as kickbacks and ...

RESPA provides consumers with the opportunity to shop for their best possible mortgage solution. It ensures that consumers obtain information on prearranged business agreements, the cost of closing a mortgage loan, and protects against excessive settlement costs and unearned fees.

A: The primary purpose of RESPA is to ensure that homebuyers are provided with accurate and timely information about the costs of their real estate transactions, prevent kickbacks and referral fees that could increase the cost of settlement services, and promote fair competition among settlement service providers.