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What is RESPA

Writer: Wesley Stolsek
Wesley Stolsek
Nov 25, 2025
2 min read

A RESPA violation occurs when someone breaks the rules of the Real Estate Settlement Procedures Act (RESPA)—a federal law designed to protect consumers during real estate transactions involving federally-related mortgage loans.

What RESPA Prohibits (Common Violations)

1. Kickbacks & Referral Fees (Section 8)

This is the most well-known RESPA violation.It is illegal for any real estate agent, lender, title company, inspector, or other real estate professional to:

  • Give or receive anything of value in exchange for a referral

  • Make under-the-table payments, “marketing fees,” or quid-pro-quo arrangements

  • Split fees with someone who did not actually perform services

Examples:

  • A lender gives an agent gift cards or cash for every buyer referral

  • A title company pays an agent “marketing fees” that are really disguised referral payments

  • A home warranty company gives bonuses for sending them clients

2. Unnecessary Fees / Fee Splitting

Charging consumers junk fees or splitting fees for services not actually performed is also illegal.

Examples:

  • Two companies charging the same customer for the same service

  • A settlement provider adding an extra “processing fee” that has no purpose

3. Required Use of a Particular Service Provider

A real estate professional cannot require consumers to use a specific:

  • Lender

  • Title company

  • Home inspector

  • Insurance company

Unless it is clearly disclosed and meets specific exceptions (rare).

4. Failure to Provide Required Disclosures

RESPA requires certain disclosures for transparency, including:

  • Loan Estimate

  • Closing Disclosure

  • Servicing transfer notices

  • Affiliated business arrangements (AfBA) disclosures

Failing to provide these on time—or at all—is a violation.

Why RESPA Matters

RESPA exists to ensure:

  • No hidden fees

  • No secret payments between real estate professionals

  • Consumers can freely choose service providers

  • Settlement costs are transparent and fair

 
 
 

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Wes Stolsek, Realtor®​

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7445 N Oracle Rd. # 201

Tucson, AZ  85704

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