Which statement best describes the main purpose of RESPA?

• A. Prohibits kickbacks and limits referral fees
• B. Regulates mortgage interest rates
• C. Requires property appraisals
• D. Sets building codes

Answer: (A)

RESPA protects consumers in real estate settlements by ensuring transparency in the costs and by curbing improper payments between service providers. Its main aim is to prevent inflated closing costs caused by kickbacks and referral fees, so buyers aren’t paying more than necessary and can compare service providers more freely. That focus on eliminating kickbacks and limiting referral fees best captures what RESPA is designed to do.

Note that RESPA does not set mortgage interest rates, it does not require property appraisals as a primary duty, and it does not set building codes. Its core function is about disclosure of settlement costs and preventing arrangements that raise those costs through kickbacks or improper referral fees.