Which regulation prohibits kickbacks in the mortgage industry?

The Real Estate Settlement Procedures Act (RESPA) is the regulation that prohibits kickbacks in the mortgage industry. RESPA’s main purpose is to protect consumers by requiring transparency in the real estate settlement process and ensuring that buyers receive clear information about the costs involved in their transactions. One of the significant provisions of RESPA is its prohibition against paying or receiving kickbacks or referral fees in connection with transactions involving federally related mortgage loans. This is designed to eliminate any financial incentives that could compromise the integrity of the settlement process and ultimately protect consumers from inflated costs.

In contrast, the other options do not address the issue of kickbacks. The Truth in Lending Act primarily focuses on disclosure of loan terms and costs to consumers, aiming to ensure they understand the terms of their credit obligations. The Home Mortgage Disclosure Act requires lenders to provide information about their mortgage lending practices to assess compliance with fair lending laws. The Equal Credit Opportunity Act prohibits discrimination in lending based on various protected characteristics but does not specifically address kickbacks. Thus, RESPA stands out as the clear regulation aimed at preventing kickbacks in the mortgage industry.