What Is A RESPA Claim?
The Real Estate Settlement Procedures Act (RESPA) is a piece of federal legislation that protects homebuyers from underhanded tactics that could inflate the costs related to settling their real estate. RESPA requires transparency in settlement costs and prohibits certain practices, such as kickbacks or referral fees. A “RESPA claim” refers to a lawsuit filed by a borrower who alleges a violation of the Act.
Common violations of the RESPA include:
- Kickbacks and referral fees – RESPA prohibits giving or receiving anything of value in exchange for referring business related to a federally regulated mortgage loan. Kickbacks are often passed on to consumers as higher fees or inflated costs for services. RESPA aims to reduce these costs by prohibiting those practices that artificially inflate prices.
- Requiring the use of specific title companies – Sellers cannot require a buyer to use a specific title insurance company as a condition of completing the sale.
- Inflating costs – Mortgage lenders and brokers are not allowed to charge more for third-party services (such as credit reports) than the actual cost of those services.
- Failing to provide disclosures – Lenders are required to provide borrowers with important documents, including a Good Faith Estimate of settlement costs, within a specific timeframe.
- Improperly handling escrow accounts – RESPA places a limitation on the amount of money a borrower is forced to keep in an escrow account and sets specific rules for handling overages.
- Failing to respond to loan servicer complaints – When a borrower submits a written complaint concerning their mortgage servicing, the servicer is required to acknowledge the complaint within 20 days and resolve it within 60.
What should I do if my lender has violated RESPA?
- Contact the loan servicer – Issues related to loan servicing, such as errors in escrow accounts or incorrect loan statements, your first step should be to send a written complaint to the loan servicer. They must acknowledge the complaint in writing within 20 business days and resolve the matter either by correcting it or denying it within 60 business days.
- File a complaint with the CFPB – The Consumer Financial Protection Bureau enforces RESPA regulations. You can file a complaint online or over the phone. The CFPB will forward the complaint to the lender and expect an answer within 15 days. You can then review the company’s response and provide feedback within 60 days.
- Sue the lender – You have a right under RESPA to file a private lawsuit against the lender or servicer if you believe your RESPA rights have been violated. For violations related to kickbacks or unearned fees, you have one year from the date of the violation to file a lawsuit. For violations related to loan servicing, you have three years to file a lawsuit. It is important that you consult with a Dayton, OH, real estate attorney before you file suit, so that you understand your legal options.
Talk to a Dayton, OH, RESPA Lawyer Today
Kohl & Cook Law Firm, LLC, represents the interests of mortgage borrowers whose RESPA rights have been violated. Call our Dayton RESPA lawyers today to schedule an appointment, and we can begin discussing your road to recovery right away.
