What is the purpose of the RESPA?

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to ensure transparency in real estate settlement costs. This legislation was enacted to protect consumers by requiring that they receive information about the costs associated with the settlement process, helping them understand what they are paying for and making it easier to compare the services of various providers.

RESPA mandates that lenders provide borrowers with a Good Faith Estimate (GFE) of settlement costs and a HUD-1 Settlement Statement, which itemizes all these costs, prior to closing. This transparency helps consumers make informed decisions and potentially negotiate better terms with lenders and service providers.

In contrast, the other options refer to different aspects of real estate finance. Regulating interest rates is generally the responsibility of monetary policy enacted by central banks rather than RESPA. Federal assistance for housing typically involves programs such as those run by the Department of Housing and Urban Development (HUD) or other housing agencies, rather than RESPA itself. Finally, managing tax credits for mortgage interest falls under tax regulation and policy, which is distinct from RESPA's focus on settlement cost transparency.