RESPA.
In plain English
RESPA, the Real Estate Settlement Procedures Act, is a federal consumer-protection law covering most home loans. It requires lenders and settlement agents to disclose the costs of closing so borrowers can see and compare them, and it bans kickbacks and referral fees among providers like lenders, title companies, and agents that would quietly inflate your costs. It also limits how much a lender can require you to keep in escrow for taxes and insurance, and it gives you the right to a refund of an escrow overage. It is enforced by the CFPB.
01Why it matters
RESPA is why your closing costs must be disclosed and why hidden referral kickbacks are illegal, protections that directly affect what you pay to buy a home.
02The math, step by step
Under RESPA, a title company cannot legally pay a real estate agent a fee for steering clients to it. If it did, both could face penalties, because the kickback would raise the buyer's cost without adding value.
03What this is NOT
RESPA is NOT the Truth in Lending Act. RESPA governs settlement-cost disclosure and bans kickbacks; TILA governs disclosure of the loan's cost of credit, like the APR and finance charges.
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