What is the Real Estate Settlement Procedures Act?

The Real Estate Settlement Procedures Act (RESPA) is a federal law that protects consumers when they take out a loan to purchase a home or other real estate in California. RESPA was enacted in 1974 and was designed to make home buying easier and more transparent for consumers. Under this law, lenders and other related parties must provide clear and complete information about the loan process and the fees and charges associated with it. RESPA also requires lenders to provide a Good Faith Estimate of closing costs and give consumers a three-day right of rescission if they decide to cancel the loan after signing papers. In addition, it requires lenders to disclose their expected costs and fees in advance, including any kickbacks or referral fees they receive. This helps ensure that all parties are paying fair and reasonable fees for their services. RESPA is also intended to protect consumers from abusive lending practices, such as unearned fees and deceptive marketing. Any violation of the law by a lender can result in civil penalties and fines, as well as criminal sanctions. RESPA is enforced by the Consumer Financial Protection Bureau, which can investigate and take action against any lender who violates its provisions. Overall, the Real Estate Settlement Procedures Act provides important protections for California consumers by ensuring that all parties involved in a loan transaction are transparent and fair in their dealings. It is critical for consumers to understand this law before engaging in a real estate transaction.

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What is the Real Estate Settlement Procedures Act?

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