The United States Congress enacted the federal Real Estate Settlement Procedures Act in 1974, more commonly known as RESPA, 12 U.S.C. § 2601 et seq. The act became law on June 30, 1976, and is implemented by Regulation X, 12 CFR 1024. RESPA applies to all federally related loans secured by a mortgage placed on one-to-four family residential properties. Generally, RESPA covers residential real estate secured with a first or subordinate lien, lender approved assumptions, refinance loans, property improvement loans, and home equity lines of credit (HELOCs).

Prior to the passage of RESPA, the consumer was often confused regarding loan terms and costs. There was great potential for additional costs to be added to a loan due to kickbacks and referral fees without the consumer's knowledge. In enacting RESPA, Congress clearly provided protective legislation that helped consumers become better shoppers for settlement services and protected them from abusive settlement practices. Specifically, RESPA addresses the following issues:

• Provides more effective advance disclosure to buyers and sellers of settlement costs
• Eliminates kickbacks and referral fees that tend to increase the costs of certain settlement services
• Reduces amounts buyers are required to place in escrow accounts established to ensure the payment of real estate taxes and insurance.

The Department of Housing and Urban Development (HUD) originally administered and enforced the provisions of RESPA under the Regulation X rules it developed. In 2011, the Dodd-Frank Act transferred the RESPA rulemaking and enforcement authority to the Consumer Financial Protection Bureau (CFPB).

In conjunction with TILA, RESPA is intended to give a borrower a framework for understanding residential loan transactions. RESPA contains civil, criminal, procedural, and substantive provisions.

RESPA covers loans made by federally related lenders that are secured with a mortgage placed on a one-to-four family residential property, including a condominium unit, a cooperative share, or a manufactured home (mobile home) located on the real property securing the lender's interest.

12 CFR 1024.5 - Coverage of RESPA

The following are the types of loans covered by RESPA:

• FHA, VA, or other government-sponsored loans
• Most conventional loans used for the purchase of residential real property where a one-to-four unit dwelling is or will be located (including mobile homes that are permanently attached to the land)
• Assumptions, refinances, and reverse mortgages
• Subordinate lien loans such as property improvement loans, home equity loans, and home equity lines of credit (HELOCs)