The Limits of RESPA: An Empirical Analysis of the Effects of Mortgage Cost Disclosures

60 Pages Posted: 7 Jul 2010 Last revised: 30 Apr 2011

See all articles by Elizabeth Renuart

Elizabeth Renuart

National Consumer Law Center

Jen Douglas

affiliation not provided to SSRN

Date Written: April 28, 2011


Congress passed the Real Estate Settlement Procedures Act (RESPA) in 1974 based upon documented instances of kickbacks between settlement service providers, unearned fees, and expensive and unnecessary closing costs paid by buyers and sellers of residential real estate. It opted for a disclosure strategy accompanied by few substantive prohibitions. Over the last thirty-five years, only a handful of studies attempted to measure the success of the mortgage loan disclosures. This article uses a uniquely rich database to examine this question.

We find evidence that closing costs increased since 1972 and fee types proliferated. The early cost estimate underestimated the final closing costs and projected cash to borrowers in a majority of cases, lending credence to complaints of baiting and switching. These observations call into question the efficacy of the RESPA disclosure scheme. Further, they point to the need for detailed data collection, routine monitoring of whether RESPA is meeting its legislative intent, and rigorous debate about whether RESPA’s goals can be achieved more effectively by another strategy.

This article is particularly timely because Congress instructed the new Bureau of Consumer Financial Protection to combine RESPA and related Truth in Lending Act disclosures into a single, integrated form over the next year.

Keywords: Mortgage, Disclosure, RESPA, Real Estate

Suggested Citation

Renuart, Elizabeth and Douglas, Jen, The Limits of RESPA: An Empirical Analysis of the Effects of Mortgage Cost Disclosures (April 28, 2011). Housing Policy Debate, Forthcoming, Albany Law School Research Paper No. 10-13, Available at SSRN:

Elizabeth Renuart (Contact Author)

National Consumer Law Center ( email )

77 Summer Street
Boston, MA 02110
United States

Jen Douglas

affiliation not provided to SSRN ( email )

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