Real Estate Settlement Procedures Act
Definition - What does Real Estate Settlement Procedures Act mean?
The Real Estate Settlement Procedures Act is an act that was passed in 1974 with the purpose of protecting consumers in the real estate settlement process. The act is designed to get rid of kickbacks and referral fees to protect the consumer from an inflated cost for settlements. This act also lays out a number of other regulations for real estate settlement.
Justipedia explains Real Estate Settlement Procedures Act
Before this act went into effect, consumers commonly experienced inflated prices for title insurance or other services associated with the purchase of real estate. Lenders would refer their mortgage loan borrowers to specific title insurance companies or other companies associated with settlements in exchange for a kickback. This act cracked down on such practices in an effort to keep things fair and more transparent for the consumer or the borrower.