NMLS Practice Exam 2026 – Complete Guide for Test Preparation

The Real Estate Settlement Procedures Act (RESPA) is the law that mandates the provision of a Special Information Booklet to borrowers. This booklet is designed to educate consumers about the settlement process and their rights during a real estate transaction. RESPA requires lenders to provide this booklet within three business days of receiving a loan application.

The purpose of the booklet is to ensure that borrowers are informed about the settlement process, including information on how to shop for settlement services, the different costs involved, and important possible pitfalls they might encounter. By doing so, RESPA aims to promote transparency in the real estate transaction process, which ultimately helps consumers make more informed decisions regarding their mortgages.

Other laws mentioned, such as the Truth in Lending Act, the Homeowner's Protection Act, and the Equal Credit Opportunity Act, serve different purposes. The Truth in Lending Act primarily focuses on disclosure of terms and costs associated with consumer credit, while the Homeowner's Protection Act regulates private mortgage insurance to benefit borrowers. The Equal Credit Opportunity Act addresses discrimination in lending, ensuring that all individuals have equal access to credit regardless of race, color, religion, national origin, sex, marital status, or age.