Which federal law helps consumers understand the cost of settlement services and protects them from unearned fees?

The Real Estate Settlement Procedures Act (RESPA) is the federal law that provides consumers with important information about the costs associated with settlement services in real estate transactions. One of the primary purposes of RESPA is to enhance transparency around the fees and costs involved in closing a mortgage loan. By requiring lenders to provide a Good Faith Estimate (GFE) and a HUD-1 Settlement Statement, consumers can more easily understand and compare the costs of different services involved in their real estate transaction.

Furthermore, RESPA establishes regulations that protect consumers from unearned fees. This means that it prohibits kickbacks and referral fees between settlement service providers, ensuring that consumers are only charged for services that are actually rendered. This part of the law is crucial as it prevents inflated charges and supports fairness in the real estate closing process, enabling consumers to make more informed decisions.

In contrast, the other options focus on different aspects of mortgage lending and consumer protection. The Truth in Lending Act primarily addresses the disclosure of credit terms and costs associated with borrowing, the Equal Credit Opportunity Act focuses on preventing discrimination in lending, and the Housing and Urban Development Act relates to various housing policies rather than specific disclosure of settlement costs.