Real Estate Settlement Procedures Act (RESPA)

RESPA is designed to inform buyers about the costs of closing (settlement) and to eliminate kickbacks that inflate those costs. It applies to almost all residential closings involving a "federally related mortgage loan" (which includes virtually all conventional, FHA, and VA loans) secured by a one-to-four-family home. It generally does not apply to commercial properties, vacant land, or cash transactions.Real estate firms often offer multiple services (e.g., a brokerage that also owns a mortgage company). RESPA requires that these "affiliated business relationships" be clearly disclosed to the consumer. The consumer must know they are not required to use the affiliated company. Furthermore, a seller cannot require a buyer to use a specific title insurance company as a condition of the sale; the buyer has the right to choose their own title provider.