What does RESPA stand for and what does it regulate?

The correct interpretation of RESPA is that it stands for the Real Estate Settlement Procedures Act. This federal law primarily regulates the process of closing in real estate transactions, which encompasses various aspects such as disclosures that must be provided to buyers and sellers, as well as the handling of funds, fees, and other settlement costs.

One of the key objectives of RESPA is to ensure transparency during the settlement process. It mandates that lenders provide a Good Faith Estimate of closing costs, allowing borrowers to understand the total financial obligation involved in a real estate transaction. Moreover, RESPA strictly prohibits certain practices, such as kickbacks or referral fees that can inflate the cost of settlement services. By addressing these issues, RESPA aims to protect consumers from deceptive and unfair practices during the closing of real estate transactions.

The other choices do not accurately describe the legislation or its purpose. They either misidentify the acronym or misstate its focus, thereby underselling the critical role RESPA plays in safeguarding the integrity of the real estate closing process.