What is the primary purpose of RESPA?

The primary purpose of the Real Estate Settlement Procedures Act (RESPA) is to ensure transparency in mortgage costs. This legislation was enacted to help consumers better understand the costs associated with buying a home and obtaining a mortgage, therefore fostering informed decision-making. RESPA mandates that borrowers receive clear and complete information about the costs of their loans, including any fees and other significant financial implications prior to closing. This is achieved through requirements for disclosures, such as the Good Faith Estimate and the HUD-1 Settlement Statement, which provide detailed breakdowns of all settlement costs involved in the transaction.

While there are other regulations aimed at interest rate caps, preventing predatory lending, and enhancing financial literacy, these are not the core focus of RESPA. The act specifically targets transparency and the clarity of fees associated with real estate settlement processes, which directly empowers consumers to compare costs and make more informed choices.