What does RESPA stand for?

RESPA stands for the Real Estate Settlement Procedures Act. This federal law was enacted to ensure transparency in the real estate settlement process by requiring disclosures about the costs of closing a mortgage. It aims to protect consumers by prohibiting kickbacks and referral fees that can increase the cost of settlement services. RESPA mandates that lenders provide borrowers with a Good Faith Estimate of the closing costs and requires them to provide a HUD-1 Settlement Statement at closing, detailing all the costs involved in the transaction. This legislation helps consumers to understand their mortgage and closing costs, thereby making informed decisions. The other options do not accurately reflect this essential federal law and its focus on real estate transactions.