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Real estate glossaryNational exam concept

Real Estate Settlement Procedures Act (RESPA)

RESPA is the federal law governing specified settlement practices for covered federally related mortgage loans.

Exam area: Financing

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What does “Real Estate Settlement Procedures Act (RESPA)” mean in real estate?

RESPA is the federal law governing specified settlement practices for covered federally related mortgage loans. Among other protections, it prohibits kickbacks and unearned referral fees for settlement-service business and requires disclosures implemented by Regulation X.

How is “Real Estate Settlement Procedures Act (RESPA)” different from the closest wrong answer?

RESPA focuses on settlement practices and referral compensation. TILA focuses on the cost and terms of consumer credit, implemented by Regulation Z.

What is the Georgia-specific rule?

RESPA applies to covered Georgia transactions as federal law. A state licensee's separate Georgia compensation and disclosure duties still apply alongside it.

Worked exam example

Scenario

A title provider pays an agent solely for sending closing clients, with no actual compensable service performed. The arrangement raises RESPA Section 8 concerns.

What is the most common exam trap?

Trap correction

A referral payment is not lawful simply because it is disclosed to the consumer.

Original exam check

Apply the definition

A title company offers a Georgia licensee $150 for every buyer the licensee sends to it for closing. The buyers are financing with federally related mortgage loans. The licensee would perform no services for the money and would disclose the payment to each buyer in writing. How does RESPA treat this?

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