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

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

• A. To limit the amount of loans available to buyers
• B. To ensure transparency in real estate transactions
• C. To enforce zoning laws in urban areas
• D. To regulate property taxes

Answer: (B)

The primary goal of the Real Estate Settlement Procedures Act (RESPA) is to ensure transparency in real estate transactions. This federal law was enacted to provide homebuyers and sellers with sufficient information about the costs and services involved in the settlement process, which includes the purchase of residential properties. By mandating that lenders and other parties provide clear disclosures of costs and terms, RESPA aims to protect consumers from abusive practices by real estate professionals and to facilitate informed decision-making. The law requires disclosures at various stages of the transaction, including the Good Faith Estimate (GFE) of settlement charges and the HUD-1 Settlement Statement, outlining all the actual costs involved. This transparency helps to prevent surprises on closing day and gives consumers a clearer understanding of their financial obligations in the transaction. In contrast to limiting loans, enforcing zoning laws, or regulating property taxes, which are not the primary focus of RESPA, the emphasis on transparency ensures that all participants in a real estate transaction can make more empowered choices, potentially reducing misunderstandings and disputes related to closing costs and services provided during the transaction.

The primary goal of the Real Estate Settlement Procedures Act (RESPA) is to ensure transparency in real estate transactions. This federal law was enacted to provide homebuyers and sellers with sufficient information about the costs and services involved in the settlement process, which includes the purchase of residential properties. By mandating that lenders and other parties provide clear disclosures of costs and terms, RESPA aims to protect consumers from abusive practices by real estate professionals and to facilitate informed decision-making.

The law requires disclosures at various stages of the transaction, including the Good Faith Estimate (GFE) of settlement charges and the HUD-1 Settlement Statement, outlining all the actual costs involved. This transparency helps to prevent surprises on closing day and gives consumers a clearer understanding of their financial obligations in the transaction.

In contrast to limiting loans, enforcing zoning laws, or regulating property taxes, which are not the primary focus of RESPA, the emphasis on transparency ensures that all participants in a real estate transaction can make more empowered choices, potentially reducing misunderstandings and disputes related to closing costs and services provided during the transaction.