247SimpleTests
Real Estate · Financing

What is RESPA and what does it require?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

The Real Estate Settlement Procedures Act; requires lenders to provide Loan Estimate and Closing Disclosure forms, prohibits kickbacks for referrals, and regulates escrow accounts

  1. A The Real Estate Settlement Procedures Act; requires lenders to provide Loan Estimate and Closing Disclosure forms, prohibits kickbacks for referrals, and regulates escrow accounts
  2. B A federal property tax provision
  3. C A federal law about toxic substances; requires testing of properties
  4. D A state-by-state agency licensing standard

Why this is the answer

RESPA (Real Estate Settlement Procedures Act, 1974) is a federal consumer protection law that regulates residential mortgage transactions. Key requirements: (1) lenders must provide a Loan Estimate within 3 business days of application, summarizing loan terms and estimated closing costs; (2) lenders must provide a Closing Disclosure at least 3 business days before closing, detailing the actual final terms; (3) kickbacks for referrals between settlement service providers are prohibited; (4) escrow accounts for taxes and insurance are regulated. RESPA is enforced by the Consumer Financial Protection Bureau (CFPB). Violations can result in significant penalties. The 3-day disclosure rule is intended to give borrowers time to review final terms before they are committed.
Source: Real Estate Principles, RESPA

Practice more questions

This question is from our Real Estate License Practice Tests practice test. Take the full practice test to test your knowledge across all Financing and other topics.

Take the Salesperson (National) practice test →

About this topic: Financing

PITI, mortgages versus deeds of trust, RESPA disclosures, and the math of down payments and interest are foundational. This is one of 9 Salesperson (National) questions on financing, each with a full explanation on a single study page.

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

Related questions

Financing

What is the primary distinction between a mortgage and a deed of trust?

 Financing

What does 'PITI' stand for in mortgage lending?

 Financing

What does 'loan-to-value ratio' (LTV) mean, and why does it matter?

 Financing

In a mortgage, who is the mortgagor and who is the mortgagee?

State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.

California Texas Florida New York Pennsylvania Illinois Ohio Georgia

Recommended study materials

Study guide

Real Estate License Exam Prep 3rd Ed. (Performance Programs)

National and state portion prep, contracts, agency law, fair housing, and math — the industry standard.

Check Price → Study guide

Modern Real Estate Practice 21st Ed. (Dearborn)

The most widely used real estate principles textbook: principles, law, practice, and math in one volume.

Check Price → Study guide

Real Estate Math Express (Dearborn)

Commission calculations, financing, proration, area, and all exam math explained step by step.

Check Price →

As an Amazon Associate, CJ Affiliate, and AWIN publisher we earn from qualifying purchases. Links above are affiliate links. Full disclosure →