Final answer:
The Real Estate Settlement Procedures Act (RESPA) requires disclosure of costs in the home loan process and ensures compliance with anti-discrimination lending laws. It mandates transparent lending practices to better inform consumers and prevent unnecessary expenses in settling real estate transactions.
Step-by-step explanation:
The act that requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with timely and pertinent disclosure of the nature and costs of the real estate settlement process is known as the Real Estate Settlement Procedures Act (RESPA).
RESPA is designed to help consumers become better shoppers for settlement services and to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services. By doing so, the act also supports government monitoring of lenders to ensure compliance with equal credit opportunity, fair housing, and home mortgage disclosure laws.
Through RESPA, lenders are obligated to provide important disclosures about the cost and process of the real estate transaction, including loan estimates and closing disclosures. Moreover, it mandates that the lenders cannot discriminate based on ethnicity, race, sex, or marital status, aligning with consumer protection laws.
These laws also require lenders to publicly disclose the information regarding how they administer home loans geographically and how the distribution varies by demographics such as sex and race of the loan applicants.