What is the goal of the Real Estate Settlement Procedures Act (RESPA)?

The Real Estate Settlement Procedures Act (RESPA) aims primarily to protect consumers from excessive costs related to settlement services in real estate transactions. This federal law was established to provide clear and transparent information about the costs involved in buying a home, ensuring that consumers are aware of all the fees they might encounter throughout the closing process. One of its key provisions requires lenders to provide a Good Faith Estimate (GFE) of closing costs, which allows buyers to compare costs before selecting a settlement service provider.

RESPA also aims to eliminate kickbacks and referral fees that can increase the costs of settlement services, thereby safeguarding the financial interests of consumers. By requiring disclosures and promoting competition, RESPA helps to create a more equitable landscape for real estate transactions.

The focus on regulating property appraisals, the goal of expediting closing processes, and ensuring high commissions for real estate agents do not align with the objectives of RESPA, which is fundamentally centered on consumer protection and transparency in real estate settlement practices.