What is the Real Estate Settlement Procedures Act?

The Real Estate Settlement Procedures Act (RESPA) is a Maryland banking law that requires lenders to provide information to consumers regarding the settlement costs associated with their real estate transactions. This includes things like closing costs, escrow costs, and other fees related to the purchase or sale of a home. RESPA also regulates how and when a lender can charge fees, as well as their disclosure of any fees they may have charged. The law also requires lenders to provide a “Good Faith Estimate” of closing costs at least three days before a loan closing. This document helps consumers to better understand the costs associated with obtaining a loan and what they can expect to pay at closing. Additionally, RESPA makes it illegal for a lender to give any type of kickback or referral fee to a real estate agent based on a loan referral. This is to ensure that lenders are making lending decisions based on objective criteria, rather than on the potential benefit of a referral. RESPA also requires lenders to provide an annual disclosure statement showing any fees paid to third parties for loan services. In short, RESPA is a Maryland banking law designed to protect consumers by giving them information about the costs associated with their real estate transactions and by ensuring that lenders are making their lending decisions objectively. It also provides a way for consumers to challenge any fees they feel are too high or unfair.

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