What does RESPA stand for?

RESPA stands for the Real Estate Settlement Procedures Act. This federal legislation was enacted to provide consumers with important information about the costs involved in the buying and refinancing of homes. RESPA's primary purpose is to ensure transparency in the settlement process, helping consumers understand the various fees and expenses associated with real estate transactions. It regulates the practices of lenders, mortgage brokers, and other entities involved in the closing of a mortgage loan.

RESPA mandates that borrowers receive a Good Faith Estimate of closing costs and the HUD-1 Settlement Statement, both of which break down the total costs associated with the transaction. Understanding the provisions of RESPA is critical for mortgage loan originators, as it impacts how they interact with clients and comply with federal regulations in the lending process.