RESPA concept for conditioning access to property or another service on paying a particular settlement service provider.
Required use under RESPA is a situation in which a person must use a particular settlement service provider to gain access to a distinct property or service and must pay for that provider’s settlement service, directly or through an attributable charge.
Required use matters when a lender, broker, builder, real-estate firm, attorney, or other participant refers a borrower to an affiliated provider. An Affiliated Business Arrangement Disclosure does not by itself permit the referring party to force the borrower to use the affiliate.
The rule protects meaningful provider choice. A statement that the borrower is “free to shop” has little value if declining the recommended provider makes the property or another distinct service unavailable.
The term does not mean every lender-selected service is improper. Mortgage transactions include services selected to represent the lender’s interest, and Regulation X contains narrow exceptions. The practical question is who selected the provider, why the service is required, who pays, and whether the borrower is being denied something separate for choosing another acceptable provider.
Borrowers may encounter required-use questions while choosing title, settlement, escrow, appraisal, credit-reporting, legal, or other mortgage-related services. The issue often becomes visible when a referral, contract clause, incentive, or closing instruction names one particular company.
Review these points before treating a provider as mandatory:
| Question | Why it matters |
|---|---|
| What property or distinct service is conditioned on the choice? | Required use involves access to something separate, not merely a recommendation |
| Must the borrower pay the named provider? | The definition includes a direct or attributable settlement-service charge |
| Is the provider affiliated with the referrer? | Affiliated arrangements have disclosure and exemption conditions |
| Does a narrow lender- or attorney-related exception apply? | Not every provider selected for another party’s interests is treated the same way |
| Is an offered package genuinely optional? | A voluntary package can differ from forced provider use |
Offering an optional package of settlement services does not automatically create required use. A discount or rebate can also be permissible when the buyer can decline the package, the discount is genuinely below otherwise available prices, and the apparent savings are not recovered through higher charges elsewhere in the settlement.
That distinction is factual. Calling a package “optional” does not settle the question if the borrower cannot realistically obtain the property or service without accepting it.
A home builder refers buyers to an affiliated title company. The builder provides the required affiliation disclosure and says buyers may compare other providers. A buyer who selects another acceptable title company can still purchase the home on the same underlying terms.
That is different from a builder refusing to sell the home unless the buyer pays the affiliate for settlement services. The second situation presents a required-use issue because access to the property is conditioned on paying the named provider.
An optional, genuine package discount requires separate analysis. The borrower should compare the package price with the normally available individual prices and check whether another fee offsets the discount.
Required use differs from a provider recommendation. A recommendation tries to influence a choice; required use conditions access to a distinct property or service on using and paying a particular provider.
It differs from Services You Cannot Shop For. That disclosure category identifies lender-required third-party services whose providers are selected through the lender’s process. Required use is a specific RESPA concept involving conditioned access and provider payment.
It also differs from an Affiliated Business Arrangement Disclosure. The disclosure reveals an ownership or financial relationship, while required use asks whether the borrower is improperly compelled to use the affiliated provider.