Real Estate Settlement Procedures Act (RESPA)
12 U.S.C. § 2601 et seq. | Regulation X (12 C.F.R. Part 1024) | Enacted 1974
Overview, What Is RESPA?
The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq., was enacted in 1974 and is implemented by the CFPB's Regulation X (12 C.F.R. Part 1024). RESPA applies to most residential mortgage loans secured by a first or subordinate lien on a one-to-four family residential property.
**Purpose:** RESPA's primary goals are to: • Provide homebuyers with improved disclosures of settlement costs and to eliminate abusive practices in the real estate settlement services industry • Prohibit kickbacks and referral fees that increase unnecessarily the costs of settlement services • Reduce the amounts home buyers are required to place in escrow accounts
**Commercial Lending Exemption:** RESPA does NOT apply to loans for the following purposes: • Business, commercial, or agricultural loans • Loans secured by property of 25 acres or more • Loans for temporary financing (such as construction loans) • Loans on vacant land (with some exceptions)
This exemption is significant: most commercial real estate loans fall outside RESPA's scope.