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

The Real Estate Settlement Procedures Act (RESPA) primarily protects consumers in the real estate transaction process. This federal law was enacted to ensure that consumers are provided with timely and appropriate information about the nature and costs of the settlement process. RESPA mandates that lenders provide borrowers with a Good Faith Estimate of closing costs and a HUD-1 Settlement Statement that clearly outlines all the fees associated with a real estate transaction.

By requiring transparency in the settlement process, RESPA helps consumers avoid unnecessary costs and ensures they understand the financial aspects of the transaction, ultimately aiming to eliminate kickbacks and referral fees that could unfairly increase the cost of real estate services. The focus on consumer protection is crucial for promoting fair housing and responsible borrowing practices.