What does the Real Estate Settlement Procedures Act (RESPA) require?

The Real Estate Settlement Procedures Act (RESPA) primarily focuses on ensuring transparency in the home buying and mortgage process by requiring the disclosure of settlement costs to consumers. This regulation is designed to help consumers understand the various fees and expenses associated with real estate transactions, thus preventing abusive practices and reducing the potential for closing cost surprises.

Under RESPA, lenders must provide a Good Faith Estimate (GFE) of settlement costs within three business days after receiving a loan application. This information allows consumers to compare costs from different lenders and make informed decisions regarding their financing options. Additionally, RESPA mandates a HUD-1 Settlement Statement, which details all charges and credits involved in the settlement process, ensuring that buyers are fully aware of the financial implications before finalizing a purchase.

Thus, the requirement for disclosure of settlement costs directly aligns with RESPA's objective to protect consumers and promote informed decision-making in real estate transactions.