What is the primary objective of RESPA?

The primary objective of the Real Estate Settlement Procedures Act (RESPA) is to ensure that consumers are provided with better and more timely information regarding the costs associated with the mortgage settlement process. This law, enacted in 1974, aims to promote transparency in real estate transactions and protect consumers from unnecessary fees and abusive practices in the lending market.

By requiring lenders to provide borrowers with clear disclosures, such as the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement, RESPA allows consumers to understand their financial obligations before closing on a property. This facilitates informed decision-making and helps prevent surprises during the settlement process. The effort to educate consumers about the costs associated with their mortgage transactions directly supports the act's core purpose of enhancing consumer protection.

In contrast, while increasing the number of mortgage loans, streamlining the application process, and reducing fees may be auxiliary benefits of the mortgage industry, they are not the main focus of RESPA. The act is fundamentally about providing clarity and understanding for consumers entering into mortgage agreements, making the emphasis on timely information and cost disclosures paramount.