Final answer:
The Real Estate Settlement Procedure Act (RESPA) applies to various types of real estate transactions. It covers transactions involving federally related mortgage loans and requires lenders to provide borrowers with certain disclosures. RESPA is designed to protect consumers by promoting transparency.
Step-by-step explanation:
The Real Estate Settlement Procedure Act (RESPA) applies to various types of real estate transactions. RESPA covers transactions involving federally related mortgage loans, which include loans made by federally regulated lenders, such as banks and credit unions. It also applies to transactions involving the sale or refinancing of residential properties of 1 to 4 units.
RESPA requires lenders to provide borrowers with certain disclosures, such as the Loan Estimate and Closing Disclosure, which detail the costs associated with the loan and the terms of the transaction. It also regulates the handling of escrow accounts for things like property taxes and insurance.
Overall, RESPA is designed to protect consumers by promoting transparency and preventing kickbacks or referral fees that could drive up the cost of mortgages.