RESPA Overview

Question 1

3 Functions of RESPA

The Real Estate Settlement Procedures Act (RESPA) and its implementing regulations serve to:

Answer 1

-Protect consumers from excessive settlement costs and unearned fees

-Limit the amount of funds that creditors can require consumers to deposit into escrow
accounts

-Establish disclosures, policies, and procedures to facilitate timely communications
between loan servicers and consumers

Question 2

Who is responsible for enforcement of RESPA and for issuing/implementing regulations?

Answer 2

The Consumer Financial Protection Bureau (CFPB)

Question 3

RESPA’s regulations are known as?

Answer 3

Regulation X

Question 4

Disclosures Required by RESPA

Answer 4

The Loan Estimate (LE),
Closing Disclosure,
special information booklet,
affiliated business arrangement disclosure,
disclosures related to mortgage servicing and escrow accounts

in certain transactions,
the Good Faith Estimate (GFE) and HUD-1 Settlement Statement.

Question 5

RESPA does not apply to:

What type of loans are exempt from RESPA?

Answer 5

A: Agricultural

B: Business

C: Commercial

T: Temporary Financing (if the loan may be converted to
permanent financing by the same lender, the exemption does not apply)

V: Vacant Land ( If the proceeds will be used to locate a manufactured home or construct a structure within two years from the settlement date, the loan is not exempt.)

• Loan assumptions which are permissible without lender approval
• Transactions between lenders and investors for the sale of a closed loan to a purchaser in the secondary market
• Loan conversions, when a new note is not required and the provisions are consistent with those of the original mortgage