Why must lenders comply with RESPA?

Lenders are required to comply with the Real Estate Settlement Procedures Act (RESPA) primarily to ensure that borrowers are fully informed about all closing costs and procedures involved in the mortgage process. RESPA aims to protect consumers by requiring lenders to provide clear and accurate disclosures regarding the fees and services associated with real estate transactions. This transparency helps borrowers understand what they will be paying and prevents undisclosed kickbacks and referral fees, thereby promoting fairness in the lending process. By offering essential information about loan costs and potential conflicts of interest, RESPA seeks to enhance informed decision-making among borrowers, which is a crucial aspect of consumer protection in the housing market.