Definition of RESPA:
RESPA in Orange County:
The RESPA act was originally passed by Congress in 1974 and was designed to protect potential homeowners and enable them to become more intelligent consumers. RESPA requires that lenders provide greater amounts of information to prospective borrowers at certain points in the loan settlement process. It also prohibits the various parties involved from paying kickbacks to each other. Before this act was created, it was a common practice for a lender to advertise a loan at a certain rate of interest provided the borrower use the lender's title insurance company or other escrow company or other 3rd party affiliate at a greatly inflated price. The affiliate would then pay the lender a portion of the inflated fee as a kickback. RESPA violations are now taken very seriously and can result in loss of real estate license, sanctions or worst.
When a home sale is financed, RESPA requires that lenders give borrowers a Good Faith Estimate that lists closing costs associated with the loan within three business days of a loan application. The HUD describes RESPA in detail CLICK HERE.