What is the Real Estate Settlement Procedures Act?

The Real Estate Settlement Procedures Act (RESPA) is a federal law that was enacted in 1974 to protect consumers when buying or selling real estate in the United States. In Texas, this law applies to all residential real estate transactions, including homes, condominiums, co-op apartments, and other residential dwellings. RESPA requires that all lenders and real estate brokers provide borrowers and buyers with disclosure forms to inform them about how their money is being handled in the real estate transaction. RESPA also requires that lenders and brokerages clearly explain all the fees and costs associated with the transaction. Specifically, this includes disclosing all fees for loan origination, appraisal, inspections, title insurance, real estate title searches, and any other costs associated with the transaction. In addition, lenders are required to give borrowers and buyers a good-faith estimate of the total closing costs and fees associated with the transaction. RESPA is important because it ensures that buyers and lenders can confidently make informed decisions about a real estate purchase. By providing a standardized disclosure form, buyers know exactly what will be expected of them in order to successfully close on a property. Similarly, lenders can better assess the risks associated with the transaction to determine the best loan rate for the buyer. In short, RESPA provides essential consumer protections for all parties involved in a real estate transaction in Texas.

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What is the Real Estate Settlement Procedures Act?

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