The Real Estate Settlement Procedures Act was enacted in 1974 to protect consumers during a real estate settlement or closing by prohibiting certain practices, such as kickbacks and referral fees. RESPA requires that borrowers receive disclosures that spell out costs, outline services, and describe business relationships throughout the settlement process. REALTORS® must ensure that they’re in compliance with RESPA at all times, and HUD enforces what is covered under RESPA law. Failure to comply may result in penalties that include triple damages, fines, and even imprisonment.

In 2008, amendments to Regulation X (24 CFR Part 3500), which implements RESPA were published and the final RESPA rules took effect on January 1, 2010. The following, updated rules are particularly critical for REALTORS®:

• Loan originators must provide borrowers with a standard, revised Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs.
• Closing agents must provide borrowers with a new HUD-1 settlement statement.

HUD released three sets of Frequently Asked Questions (FAQs) on the most recent RESPA rules that are organized by subject, covering multiple topics ranging from questions concerning effective dates, to filling out the new GFE and HUD-1 forms.