What does RESPA stand for?

The correct answer is the Real Estate Settlement Procedures Act. This law was enacted to ensure that consumers are provided with important information about the costs involved in the settlement process of real estate transactions, including mortgage loans. RESPA is designed to protect consumers from abusive practices in the real estate settlement process, promote transparency, and enable them to make informed decisions regarding their mortgage options.

The act specifically requires lenders and mortgage brokers to provide a Good Faith Estimate of closing costs, as well as a HUD-1 Settlement Statement that details the final costs at closing. This focus on disclosure is crucial for consumers, as it helps them understand what they are paying for and minimizes the likelihood of surprise fees and unforeseen expenses during the home buying process.

By understanding the purpose and implications of RESPA, mortgage loan originators and other professionals in the real estate industry can better serve their clients and comply with legal requirements.