Navigating RESPA: A Notary’s Handbook to Real Estate Settlement Procedures
Published September 18, 2024 · Updated May 21, 2026
RESPA (the Real Estate Settlement Procedures Act) is a federal law from 1974 that governs how real estate closings work in the United States. As a signing agent, you do not enforce RESPA, but you handle the documents it created. Knowing the basics helps you answer borrower questions confidently and spot problems before they cause closing delays.
What RESPA Does
RESPA requires lenders to disclose closing costs upfront, prohibits kickbacks between settlement service providers, and limits how much borrowers must deposit into escrow accounts. The goal was to stop hidden fees and referral schemes that inflated closing costs for homebuyers.
The Documents You Will See at Every Closing
Closing Disclosure (CD)
The Closing Disclosure replaced the old HUD-1 Settlement Statement and Good Faith Estimate in 2015 for most transactions. It is a five-page form that shows the loan terms, monthly payment, closing costs, and cash needed to close. The lender must provide this to the borrower at least three business days before closing.
As a signing agent, you will see the borrower’s copy in the loan package. You do not explain the numbers (that is the loan officer’s job), but you should know that if the borrower says the numbers look wrong, they should call their loan officer before signing.
Loan Estimate (LE)
The Loan Estimate is provided within three business days of the borrower’s loan application. It shows estimated closing costs and loan terms. By closing, the numbers on the CD should closely match the LE. If they do not, the borrower should ask their lender why.
HUD-1 (Still Used for Some Transactions)
The HUD-1 Settlement Statement is still used for reverse mortgages and some commercial transactions. If you see a HUD-1 instead of a CD, the transaction falls outside the standard residential mortgage rules.
The Kickback Rule and Why It Matters to You
RESPA Section 8 prohibits giving or receiving anything of value in exchange for referrals of settlement service business. This means:
- A title company cannot pay you a referral fee for sending them notary clients.
- You cannot pay a real estate agent to recommend you as a signing agent.
- A lender cannot require a borrower to use a specific title company (with some exceptions for affiliated business arrangements that are properly disclosed).
Violations carry penalties up to $10,000 per incident. This is federal law, not a suggestion. If someone offers you a kickback for referrals, decline it.
The Three-Day Waiting Period
The Closing Disclosure triggers a three-business-day waiting period before the loan can close. The clock starts when the borrower receives the CD (mailed counts as received three business days after mailing). If certain terms change (loan amount, interest rate, loan product type), a new three-day period starts.
You cannot backdate documents to circumvent this waiting period. If the CD was delivered late and the three-day period has not passed, the closing gets pushed back. This is not your call to make. Let the title company handle it.
What Signing Agents Should and Should Not Do Under RESPA
- Do point borrowers to the correct page of the CD when they ask where to find their monthly payment or closing costs.
- Do tell borrowers to contact their loan officer if the numbers on the CD do not match what they expected.
- Do not explain whether the interest rate is good or bad.
- Do not advise borrowers on whether to accept the loan terms.
- Do not recommend specific title companies, home inspectors, or insurance agents (that would be a referral).
Frequently Asked Questions
Does RESPA apply to commercial loans?
No. RESPA applies only to residential real estate transactions with a federally related mortgage loan (most conventional, FHA, and VA loans). Commercial loans, raw land purchases, and some investment property loans are exempt.
Can I answer questions about the Closing Disclosure?
You can point out where information is located on the form. You cannot interpret the terms or advise the borrower on whether the loan is favorable. If they have questions about the numbers, direct them to their loan officer.
What if the borrower refuses to sign because of the closing costs?
Call the title company or signing service that hired you. Document the borrower’s concern and their decision. You cannot convince them to sign or explain why the costs are what they are. That is the lender’s responsibility.
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Updated May 2026.
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