What does RESPA stand for?

The correct answer is the Real Estate Settlement Procedures Act. RESPA is a federal law that was enacted in 1974 to provide consumers with information about the costs associated with the settlement process when purchasing real estate. Its primary purpose is to help ensure that consumers are informed and protected throughout the closing process of a real estate transaction.

By providing requirements for disclosures, RESPA aims to eliminate certain practices that inflate the costs of settlement services, such as kickbacks or referral fees. The act requires lenders to provide borrowers with a Good Faith Estimate of closing costs and a HUD-1 Settlement Statement that details all the costs associated with the transaction.

Understanding RESPA is essential for anyone involved in real estate transactions, as it promotes transparency and accountability, ensuring that consumers can make informed decisions regarding their settlements.