What does RESPA primarily address in real estate transactions?

RESPA, which stands for the Real Estate Settlement Procedures Act, primarily addresses the issue of closing costs in real estate transactions. This federal law was enacted to provide transparency for consumers regarding the costs associated with the settlement process when purchasing a home. Under RESPA, lenders must provide borrowers with a good faith estimate of closing costs, allowing them to understand the various fees they will encounter such as those for title insurance, appraisal fees, and other closing-related expenses.

By focusing on closing costs, RESPA ensures that consumers are better informed and can compare costs from different lenders. This helps prevent unexpected surprises at the closing table and promotes fair practices in the real estate settlement process. The act also aims to eliminate kickbacks and referral fees that can increase the overall costs of obtaining a mortgage. This central focus on closing costs distinguishes RESPA from other options that touch on different aspects of real estate transactions, such as title transfer procedures, loan interest rates, and property maintenance, which are not the core of RESPA's purpose.