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A Quick Look at What RESPA Applies to and What It Prohibits

A list of transactions covered and not covered by the federal Real Estate Settlement Procedures Act.

The federal Real Estate Settlement Procedures Act (RESPA) covers transactions involving a federally related mortgage loan on residential property. 

Transactions covered by RESPA: 

  • home purchase loans
  • refinances
  • lender-approved assumptions
  • property improvement loans
  • equity lines of credit
  • reverse mortgages

Transactions not covered by RESPA:

  • an all-cash sale
  • a sale where the individual home seller takes back the mortgage
  • a rental property transaction 
  • other business purpose transaction. 

Under RESPA, a broker may jointly advertise with a mortgage broker or title company. If a broker chooses to do this, each party should pay a pro rate share of the cost of the advertisement to avoid a potential RESPA violation. For example, if the title company’s portion of the ad is one-third of the page and the Realtor’s information takes up two-thirds of the page, then splitting the cost of the ad 50/50 could be an issue.

For more information, visit NAR's RESPA informational page.