RESPA is one of the foundational federal laws governing US residential mortgage origination. Enacted in 1974, it has been amended multiple times to address consumer protection concerns in mortgage settlement.
What RESPA covers
- Settlement cost disclosures — borrowers must receive specific disclosures (Loan Estimate, Closing Disclosure) within timeframes
- Section 8 prohibitions — no kickbacks or unearned referral fees between settlement service providers (lenders, brokers, realtors, title companies, appraisers)
- Section 9 — sellers cannot require buyers to use a specific title insurance company
- Escrow account limits — Section 10 caps how much a lender can require in escrow reserves
- Servicing transfer disclosures — borrowers must be notified when servicing rights are sold
RESPA enforcement
Enforced by the Consumer Financial Protection Bureau (CFPB) since 2011, previously by HUD. CFPB has pursued multi-million-dollar settlements against lenders for RESPA Section 8 violations involving disguised referral fee arrangements (MSAs, lead-gen subsidies, below-market office space rentals).
RESPA disclosures timing
- Loan Estimate — within 3 business days of application
- Closing Disclosure — at least 3 business days before closing
- Servicing Disclosure Statement — within 3 business days of application
- Affiliated Business Arrangement (AfBA) Disclosure — at the time of referral, when applicable
