Real Estate: Unit 14*

Real Estate Settlement Procedures Act (RESPA)

A federal law enacted to protect consumers in the settlement process by requiring accurate and timely information about the actual cost of a transaction, eliminating kickbacks and other referral fees, prohibiting the seller from requiring the buyer to buy title insurance from a particular company and prohibiting lenders from requiring excessive escrow account deposits.

NOTE: RESPA does not apply to a transaction financed solely by a purchase money mortgage taken by back by a seller, installment contracts (contrct for deed), or a buyer's assumption of seller's existing loan.

Loan Estimate form

Must be provided to the borrower no later than three business days after receiving a loan application.

Closing Disclosure

Itemizes all changes to be paid in connection with closing.

Debit (give)

A charge that must be paid by the buyer or the seller at closing.

Credit (receive)

The amount entered in favor of the buyer or the seller.

Proration

The division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel and utility bills.