What is the Real Estate Settlement Procedures Act (RESPA) designed for?

The Real Estate Settlement Procedures Act (RESPA) is primarily designed to provide transparency in loan settlement costs. This legislation requires that borrowers receive significant information regarding the closing process, including an itemized list of settlement charges. By ensuring that consumers are informed about all costs associated with the settlement of a mortgage, RESPA aims to eliminate hidden fees and practices that could be detrimental to borrowers.

The act mandates that lenders provide a Good Faith Estimate, which presents an estimate of the settlement charges, as well as a HUD-1 Settlement Statement that breaks down the actual costs incurred during the closing process. This transparency empowers consumers to make informed decisions about their mortgage loans and understand the financial implications of the transactions they are entering into.

The other aspects mentioned in the options, such as regulating property taxes, facilitating quick loan approvals, and supporting mortgage interest deductions, do not align with the fundamental goals of RESPA, which focus specifically on the clarity and fairness of the settlement process. This focus on transparency in costs is critical in promoting a fair and informed real estate transaction environment.