What does the Real Estate Settlement Procedures Act (RESPA) require from lenders?

The Real Estate Settlement Procedures Act (RESPA) was enacted to increase transparency in the real estate transaction process, particularly regarding the costs associated with mortgage loan settlements. One of the primary requirements that RESPA imposes on lenders is the obligation to provide borrowers with specific disclosures about the nature and costs of the settlement process. This includes details about the fees that will be charged, as well as information on the settlement services involved in the transaction.

Under RESPA, lenders must provide a Good Faith Estimate (GFE) of settlement costs to the borrower, detailing all expected charges, helping consumers to understand and compare different loan offers. Additionally, RESPA requires that a HUD-1 Settlement Statement be provided at closing, which outlines all the actual costs and charges incurred in the transaction. This requirement is aimed at preventing unanticipated expenses that could lead to confusion among borrowers.

The other options do not reflect the core purpose of RESPA. For instance, the requirement for disclosing minimum interest rates or offering fixed-rate loans is not a part of RESPA's provisions. Similarly, accepting referral fees is not mandated by RESPA, and in fact, RESPA has regulations that govern the payment of referral fees to prevent kickbacks that can inflate the costs of settlement services.