What does the Real Estate Settlement Procedures Act (RESPA) primarily aim to do?

The Real Estate Settlement Procedures Act (RESPA) primarily aims to eliminate unnecessary increases in settlement service costs. This federal law was enacted to provide consumers with transparency in the real estate transaction process, particularly regarding the costs associated with closing a mortgage loan.

RESPA requires that consumers receive a good faith estimate of settlement costs within three days of applying for a loan. This ensures that they have a clear understanding of what fees they can expect and that they are not subject to unexpected charges at closing. By setting these guidelines, RESPA helps to create a competitive environment among service providers, thus minimizing the likelihood of inflated costs that can occur in real estate transactions.

The other options, while related to aspects of real estate and mortgages, do not accurately capture the primary purpose of RESPA. Understanding the focus of RESPA on costs and fees is crucial for mortgage loan originators to ensure they are providing accurate information to consumers and complying with the law.