What law requires that a "good-faith estimate" be given to a borrower for a federally related loan?

The requirement for a "good-faith estimate" to be provided to a borrower for a federally related loan is outlined in the Real Estate Settlement Procedures Act (RESPA). This law was enacted to ensure that borrowers receive clear and accurate information regarding the costs and terms of their loans, helping them make informed decisions throughout the mortgage process.

Under RESPA, lenders are mandated to provide a good-faith estimate of settlement charges that a borrower is likely to incur, ensuring transparency and allowing borrowers to compare costs from different lenders easily. This is pivotal in fostering a fair and equitable lending environment and protecting consumers from unexpected fees that could arise during the closing of a real estate transaction.

While other laws like the Truth in Lending Act address disclosure requirements about loan terms, including interest rates and total payment obligations, they do not specifically require the issuance of a good-faith estimate for settlement costs like RESPA does. The Fair Housing Act primarily addresses discrimination in housing practices, and the Equal Credit Opportunity Act is aimed at preventing discrimination in lending, neither of which pertain specifically to the good-faith estimate requirement.