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Study questions RESPA’s reliance on ‘sunshine’

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Editor's note: Join the discussion about reform of the federal Real Estate Settlement Procedures Act in the "RESPA Reform" group at the Inman Community site. Penalties for violating the Real Estate Settlement Procedures Act (RESPA) are minimal, and until recently the Department of Housing and Urban Development has done little to enforce the law's anti-kickback provisions, according to a study by a HUD researcher. The study analyzes whether the heavy reliance on disclosures required under RESPA to create "sunshine" for consumers is effective in keeping settlement services providers honest and limiting the need for enforcement actions. While the study does not claim to definitively answer the question it raises, its author suggests regulation of lender and settlement services fees might be better left to the states. Federal lawmakers may have "implicitly chosen a low probability of detection" of RESPA violations, HUD researcher Mark Shroder sai...