What does the Real Estate Settlement Procedure Act (RESPA) require from lenders?

The Real Estate Settlement Procedures Act (RESPA) is designed to protect consumers during the real estate settlement process. One of its significant requirements is that lenders must provide borrowers with a good faith estimate of closing costs. This estimate outlines the various fees and charges that a borrower can expect to incur during the closing of a mortgage loan, giving them transparency and helping them to plan for those costs.

The rationale behind this requirement is to prevent lenders from charging hidden fees and to allow borrowers to compare loan offers from different lenders effectively. By providing a good faith estimate, lenders ensure that consumers are informed about the financial implications of their mortgage transactions, thereby promoting a fair and transparent lending process.