What does RESPA stand for?

The acronym RESPA stands for the Real Estate Settlement Procedures Act. This is a significant piece of legislation in the United States that aims to ensure transparency in the real estate settlement process. RESPA was enacted to inform consumers about the various costs associated with the closing of a real estate transaction, which helps to prevent unscrupulous practices and protect the interests of homebuyers.

The act requires that specific disclosures be provided to borrowers, such as the Good Faith Estimate (GFE) and the HUD-1 settlement statement, which detail the final closing costs. By mandating these disclosures, RESPA helps consumers make informed decisions and fosters fair lending practices within the real estate industry. Understanding RESPA is crucial for mortgage professionals, as it governs how they must operate when it comes to providing services related to residential mortgages.