What federal law requires borrowers to be informed of settlement costs?

• A. RESPA
• B. TILA
• C. ECOA
• D. HIPAA

Answer: (A)

The key idea is identifying which federal law requires lenders to disclose all settlement costs so borrowers can understand and compare what they’ll pay at closing. That law is RESPA, the Real Estate Settlement Procedures Act. It sets up standardized disclosures that reveal the expected and actual costs of the real estate settlement, helping buyers see where money is going and avoid surprise charges. Early in the process you’ll see a good faith estimate of closing costs, and at or before closing you’ll get a settlement statement that lists the actual charges. RESPA also limits certain kickbacks and relationships that could inflate costs.

Other federal laws address different aspects of lending. For example, Truth in Lending Act focuses on disclosures about the loan terms like the interest rate and APR, not the full set of settlement costs; Equal Credit Opportunity Act protects against discrimination in lending; HIPAA governs health information privacy.