What federal law helps consumers understand the costs of settlement services?

The Real Estate Settlement Procedures Act (RESPA) is designed to help consumers understand the costs associated with settlement services in real estate transactions. This law requires that borrowers receive detailed disclosures regarding the costs and terms of their mortgage loan, particularly in regards to settlement services. Under RESPA, lenders must provide a Good Faith Estimate (GFE) of settlement costs, which outlines the expected fees associated with obtaining a mortgage. The law also governs kickbacks and referral fees, promoting transparency and preventing hidden costs, thereby enabling consumers to make informed decisions.

In contrast, the Truth in Lending Act primarily focuses on informing consumers about the cost of credit and ensuring clear disclosure of loan terms, but it does not specifically address settlement costs. The Fair Housing Act prohibits discrimination in housing-related transactions, and the Equal Credit Opportunity Act ensures that consumers have equal access to credit without discrimination. While all these laws play important roles in consumer protection, RESPA specifically targets the transparency and understanding of settlement costs in real estate transactions.