What is the primary purpose of RESPA?

The primary purpose of the Real Estate Settlement Procedures Act (RESPA) is to provide transparency in closing costs. RESPA was enacted to ensure that consumers are fully informed of the settlement costs associated with a real estate transaction. It requires lenders to disclose to borrowers the estimated and final costs of their mortgage transactions, including various fees that may be charged. This transparency helps consumers understand their financial obligations and promotes informed decision-making when purchasing a home.

By requiring disclosure of closing costs, RESPA also aims to eliminate abusive practices and ensure fair competition among lenders. This means that borrowers can compare costs between different lenders more easily, leading to better financial choices. Understanding this aspect of RESPA is crucial for both real estate professionals and consumers navigating the process of buying or refinancing a home.