What does RESPA stand for?

RESPA stands for the Real Estate Settlement Procedures Act. This federal law was enacted to ensure that consumers are provided with sufficient information about the costs associated with the settlement process when purchasing or refinancing a home. It aims to protect consumers from unnecessary increases in the costs of settling a residential mortgage loan, and it established guidelines for the disclosure of settlement costs.

The legislation requires lenders to provide borrowers with a Good Faith Estimate of settlement charges, and it also mandates that certain disclosures be made regarding affiliated business arrangements and the procedures involved in real estate transactions. Understanding RESPA is crucial for real estate professionals as it impacts lending practices and consumer protection in real estate transactions.