Real estate settlement procedures act

The Real estate settlement procedure act is also known as RESPA. This act was passed by United States Congress in 1974. This act was introduced to counteract the practices such as inflating the costs of real estate transactions and other such practices.

This act requires the lenders to offer a good faith estimate for all the costs of a specific loan. It also restricts kickbacks between different parties in the real estate settlement process. But many critics often opine that the kickback mechanisms still exist even after passing this act. Some people present the view that if the kickback mechanisms are prohibited, the lenders might charge higher prices.

Some also say that if the service providers get excessive profits, the non- affiliated service providers may try to lure the costumers by offering lower prices. As a result, people might get carried away by their baits. Many people insist to make modifications in this act.

More terms explained