The acronym RESPA stands for the Real Estate Settlement and Procedures Act. This was an act passed by the U.S. Congress in response to the widespread problem of fraudulent or deceptive real estate transactions and shady practitioners, “kickbacks” and the like from the “old boy” system. It also addressed the crescendo of consumer complaints concerning real estate practices, industry “kickbacks” and phony fees. The purpose of this act was to mandate the standardization of real estate settlement and closing practices and to further regulate the industry.

Likewise, the Federal Consumer Credit Protection Act (FCCPA), which is commonly referred to as the Truth-in-Lending, was drawn up and implemented by the Federal Reserve Board which regulates the banking business. This act requires the lender and those interfacing the lending industry to lay all their cards clearly on the table and to put their documents in plain language that the average person can understand. Obviously the consumer should be able to fully understand all the charges he is going to incur as part of the loan he is taking on. The borrower’s right to rescind is hereby clearly spelled out.

Because of the Truth-in-Lending, closing personnel are forced to disclose fully. In plain terms it must disclose the full loan amount, any additional fees and what they are for, the number of payments for the mortgage loan to be discharged, the finance charge and interest rate, etc.

Since almost all monies are procured through the federal money market and are insured through federal programs, almost every residential and commercial transaction is subject to these two acts.