The Real Estate Settlement Procedures Act (RESPA) regulates?

The Real Estate Settlement Procedures Act (RESPA) primarily focuses on promoting transparency and reducing costs for consumers in the real estate settlement process, particularly concerning residential mortgage transactions. It requires detailed disclosures about the costs associated with closing on mortgage loans, ensuring that borrowers have a clear understanding of their financial obligations.

RESPA mandates the presentation of a Good Faith Estimate (GFE) and a HUD-1 Settlement Statement, which outline all settlement costs, enabling borrowers to compare offers from different lenders and make informed decisions. This level of disclosure is crucial for preventing kickbacks and other unethical practices in the industry, thereby enhancing consumer protection.

The other options deal with different aspects of real estate transactions or loan processes that RESPA does not directly regulate. For example, prorating interest and taxes involves calculations related to property ownership often addressed in state-specific regulations rather than under RESPA. Similarly, RESPA does not set interest rates for loans or determine the amounts borrowed by individual purchasers; these aspects are influenced by market dynamics and personal financial circumstances.