What does RESPA stand for?

RESPA stands for the Real Estate Settlement Procedures Act. This federal statute was enacted to help consumers understand the costs associated with settling a residential real estate transaction and to protect them from abusive practices. It mandates that lenders provide borrowers with disclosures about the settlement process, including information on the settlement costs and the potential for kickbacks or referral fees that can inflate the costs of real estate transaction services.

By requiring transparency in the fees and charges upfront, RESPA aims to make the costs of obtaining a mortgage more predictable and to reduce the likelihood of unfair practices in closing transactions. This understanding is crucial for anyone involved in mortgage lending, as it helps loan officers guide their clients through the settlement process effectively while adhering to legal requirements.

The other options, while they may sound plausible, do not accurately describe the purpose of the act or its full name. The focus of RESPA is primarily on settlement procedures and safeguarding consumer interests in real estate transactions.